When the occupant fails to pay his or her monthly mortgage on time, foreclosure is the consequence. Since the occupant doesn’t become a homeowner until the mortgage obligation is complete, the bank or lender can sell the home to buyers without the occupant’s permission.
There are pitfalls to buying a foreclosed home. While a foreclosed home is less expensive, the home sells as-is, so don’t expect the bank or lender to make repairs. Those repairs are the buyer’s responsibility. A second major risk is dealing with the former occupant’s wrath. The occupant and his/her family could damage the property before eviction, leave unwanted belongings behind, or take illegal items with them (appliances, countertops, flooring, plumbing, etc). Furthermore, the former occupant may sue the buyer for taking ‘their’ home, refuse to move after closing, vandalize the home, or arrive at the home unannounced causing trouble. Extra disadvantages include criminal activity, inheriting liens/property taxes, and a longer closing process. After these pitfalls, it makes pursuing a foreclosed home less enticing and more expensive than buying a move-in ready home.
The silver lining
Should the pitfalls fail to deter buyers from pursuing foreclosed homes, it’s imperative to rely on intelligence and common sense. Learn about the ins and outs of the property before bidding. Once a foreclosed home becomes the buyer’s property, there’s no undoing it. Four tips will assist buyers immensely.
Hire a foreclosure agent
Most real estate agents have expertise in foreclosed homes, but very few specialize in it. Find an agent who specializes in foreclosed homes. These agents know the foreclosure difficulty, so they will mitigate the damage. To find these savvy agents, scroll through foreclosure listings and meet agents assigned to foreclosed homes. In some cases, the buyer only deals with the lender or bank’s agent without a separate buyer’s agent. In turn, there are fewer intermediaries to go through, and that means fewer agents asking for commission costs.
View the property
If it’s possible to view the property’s interior, do so. Take plenty of photos and videos. However, not all banks and lenders will allow it, especially during an auction. Without in-person viewing, it’s difficult to determine interior damage. However, exterior damage is a decent indicator. Notice unkempt lawns, graffiti, and broken windows. Look around the neighborhood for sale/rent signs and boarded homes. Never buy a foreclosed home without viewing it in person.
Get a home inspection
A home inspection from all potential foreclosed properties will confirm or deny arising doubts and/or fears. Home inspections determine cosmetic, underlying, and upcoming repairs the home requires. This is the contingency plan allowing buyers to decline a deal without legal repercussion. Never buy a foreclosed home without a home inspection.
Prep finances before and after foreclosure
The first part is paying for the home and the second is paying for repairs. Fulfill both parts of this section. Achieve the first half by acquiring a pre-approved mortgage or having cash on hand. Achieve the second part by saving money for possible repairs. It’s better to have a surplus of funds for home repair than a shortage.
Foreclosed homes are risky. Most buyers stay away from foreclosed homes because of the complications included in the pitfalls section. There is reward in buying a foreclosed home, but only if buyers place more emphasis on the process and less emphasis on the property’s outer beauty. The winners in this game are the buyers who gained a lovely home with few pitfalls.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
Kim Kardashian and Other Crypto Influencers Have Bankrupted Thousands
As celebrity influencers jump on the crypto bandwagon, many uninformed investors are getting caught out in what are essentially pump...
Experience of Covid-19 Rapid Tests Opening the Door to a Medicine of the Future?
The response to Covid-19 by governments and the medical community demonstrated the possibilities of rapid testing and vaccine development. Now...
Surveys Show People Invest in Crypto Mostly Due to Its Ease of Trading, but What Other Reasons Are There?
In what feels like the blink of an eye, crypto has become a major buzzword of our era. But what's...
Are We on the Verge of a Roaring Stock Market Rebound?
Is a stock market recovery on the cards any time soon? Surely not, right? After all, we're living in an...
Novavax, Moderna, and BioNTech Vaccine Sales: Where Are They Now?
As vaccine sales for Novavax, Moderna, and BioNTech shift in line with a changing Covid-19 situation, the results are being...
Business2 weeks ago
Best Small Business Web Hosting — The Only Guide You Need
Cannabis5 days ago
Why Tilray Shares Rose This Friday Morning
Featured2 weeks ago
Indra Gains Traction as an ESG Asset Despite Last Month’s Controversial Board Meeting
Crowdfunding2 weeks ago
Xolid Closes €5 Million Round on Equity Crowdfunding Platform CrowdFundMe