You are looking to purchase a home, but you are also looking for the best possible bargain you can get. And you’ve probably read somewhere that a foreclosed home can be a great deal. After all, foreclosed homes typically sell for less.
However, buying a foreclosed home does come with its share of challenges, especially if you are not a professional property investor. Here are a couple of things you need to know if you are planning to buy a foreclosed home:
Understand what you are walking into
You might have stories of buyers who got excellent deals purchasing foreclosed homes. But while foreclosed homes can be remarkable investments, it is important to understand that buying such properties basically means buying the previous owner’s baggage.
The physical defects that you might contend with after buying a foreclosed home
Out of anger and frustration, the previous owner might give up the home with the attitude of “if I can’t keep it, then no one will have it!” Thus, while leaving, they carry with them or destroy cabinets, appliances, sinks and anything valuable. Keep in mind that lenders will often not allow you to inspect a foreclosed home before purchase. Now, imagine bidding and paying for a home only to find out that it has been seriously sabotaged and that you have to dig deeper into your pocket to make the home liveable.
The financial implications of buying a foreclosed home
Talking about money, a typical foreclose can take anywhere from 4 to 12 months to complete. And a lot can happen during this period. For instance, what if the owners withheld information about the property’s mortgages and taxes? What if there are unpaid homeowner fees or outstanding tax liens on the property? If you are not vigilant, you might end up with these liabilities.
Protecting your rights
A foreclosed home might seem remarkably appealing. However, learning the risks associated with buying a foreclosed home can help you protect your interests and investment.