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5 Things You Must Know Before Buying a Foreclosed Home

1. You’re buying as-is.

People going through foreclosure know they have nothing left to lose. Sometimes, they take it out on their homes. They remove items such as doorknobs, wiring, fixtures, appliances or cabinets, and even make holes in walls and ceilings.

With a foreclosure, what you see if often what you get. The lender that owns the foreclosed home it unlikely to pay for repairs. Instead, I’ll help you get repair and replacement estimates so you know what it will cost to bring the home up to your standards.

2. Budget for unexpected repairs, too.

Most foreclosed homes are vacant for some time, so the plumbing, electrical, heating and air conditioning systems have been idle and will likely need tune-ups.

The former homeowners may not have been able to afford to maintain the home. Concerns like cleaning the gutters, repairing a leak in the roof or trimming overgrown vegetation may have taken a backseat to their financial woes.

If we can get in the home, you can have a home inspector examine the property to reveal hidden issues. This will help you prioritize your repairs. If serious problems are found, or you learn that too much needs to be done, you may decide that it might be better for you to walk away.

3. The discount will not be as large as the ones you see on TV shows.

Foreclosures were selling for an average discount of 14 percent nationally at the end of 2014, according to the National Association of Realtors®. Your target home has likely been aggressively priced, and it might be a bargain, but banks aren’t going to give a property away.
I’ll show you comparable sales, including foreclosed properties, to help you formulate a solid offer.

4. You’ll need a loan prequalification.

It’s a great way to make your offer look more attractive in today’s competitive and fast-moving realty market, and that’s especially the case when you’re looking to purchase a foreclosed home.
Getting prequalified shows that you’ll be ready to make a deal. I can help you find a lender who will prequalify you before we start house hunting.

5. Foreclosure auctions can be risky.

Homes sold at foreclosure auctions involve risks that may not be apparent, so you must look into the fine print. The homeowners may be able to redeem their property by paying what they owe.

The property could have tax liens or mechanics liens from unpaid bills that you become responsible for if you purchase the home.

If we stick to homes already owned by the bank that are put up for sale via the multiple listing service, you avoid those risks.

A title search conducted before closing can tell you if the home is free of tax liens or other title issues. If you’re getting a mortgage, the lender will require you to purchase a lender’s title policy. I recommend you also purchase a buyer’s title insurance policy to protect you from undiscovered liens, or title problems.
 

Contact me to get listings of foreclosures and short sale properties. You can count on me to help you throughout the process.

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I write often to give you the latest insights on owning a home or property in the local area.

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