In most cases, foreclosed homes were given up because the occupants were unable to make mortgage payments – in which case, the lender has the right to use the property as collateral. While foreclosures are an extremely unfortunate scenario for the home’s original owners, buying a home in foreclosure can be a very desirable scenario to future buyers. If you’re considering buying a foreclosed home, here are five things to keep in mind.
1. Existing Conditions
It’s likely the original owners weren’t able to invest in regular upkeep, which could mean anything from water leaks to electrical issues for a new homeowner to deal with. Beyond the condition of the home itself, the property could need new landscaping and sod, as plants could be dead or overgrown.
If the home has set unoccupied for a period of time, the property could have incurred some vandalism. New homeowners could have to deal with broken windows, graffiti, and other issues.
3. Lack Of Seller Disclosures
Since a creditor likely owns the foreclosed property and no one from the creditor has ever lived in the home, the seller will not have personal knowledge of the issues with the home. This is where home inspections become very important. If you’re considering buying a foreclosed property, make sure you hire a very credible home inspector so that you can get an accurate report of issues with the property.
4. Tough Competition
It’s not uncommon for investors to put in cash offers for foreclosed properties, and because these properties are typically listed at an attractively low price, they can sell quickly. At a time when fixer-uppers are all the rage thanks largely to flippers like Chip and Joanna Gaines, getting your hands on a foreclosed home in need of a little TLC can be a competitive thing.
5. The Unknown
Before making any offers, do your thorough research about the location and the cost of investing in renovations and updates. If you’ve never completed major renovations yourself, be sure to consult a trusted expert – or a few! And be prepared to run into a few surprises along the way.