Before you venture in buying a Foreclosed property consider its benefits and the disadvantages. You may think that you are getting a huge discount however it may also bring a lot of issues in the future. For those not familiar with the term, A Foreclosure is a legal process where the mortgaged property is sold to pay off the loan of the borrower who has not met the terms of the mortgage. Below are items that you have to consider when buying a foreclosed property.
You can bargain for the price of the property. A foreclosed property who cost less than a regular house/property for sale. Has low down payment and low interest rates. Banks and Private investors would want to dispose of the property as quickly as possible to avoid financial losses. Be sure to bargain well since private investors would generate multiple bids to earn as much as they can. Consider all factors such as location, cost, and benefits before you bid or purchase a foreclosed property.
Check the property. Make sure that it is in good condition and any appliances, furnishings, heating, vents, wiring and plumbing are working. In Some cases owners who were evicted due to payments issues would vandalize the property out of frustrations. You may be saving money from buying a low priced property however the cost of the maintenance and repairs would drain your funds. So investigate, if a showing is available use that opportunity to check the property before you buy it. It’s better to be sure than be sorry.
As mentioned foreclosed property often have vandalism issues. The property would be in shambles and not fit to live in. So before you sign that contract, check the property for any issues or maintenance/repairs that needs to be done. Check for property disclosures. Reading the supplemental statutory & contractual disclosure (a disclosure that tells facts/events that happened to the property) would be an advantage. Consider the following:
- Cleanliness – check the vents, air circulation, check for piled up dirt. It takes time and energy to clean those out and could drive you nuts. If you have allergies, a polluted air vents could cause you your health.
- Renovations – check if any renovations was done to the property. Check if the renovation would be beneficial for you in the future would only cause you endless issues. Check if those renovations have permits or required permit to avoid dealing with city government.
- Wiring and Plumbing
Check if the electricity and plumbing are in good condition. If you have to pay for these essential items to work, buying a low priced property is not worth it. Paying for the maintenance and repairs are costly. So instead of saving, you’ll end up paying more to get them fixed.
- Leaks and Corrosion
Check for any major water damage. The roof may have rotten due to neglect, damaged and corroded pipes, molding. These are major repair problems that would cost a lot money to fix.
Often than not, foreclosed properties are subject to vandalism and neglect. Previous owners would damage the property out of spite or informal settlers would break windows and doors to settle in or take items and valuables from the property. Sometimes banks or private investors won’t have time to have this checked, so be vigilant about this things. Check and investigate the property if they are worth buying or if it would make you spend more than what is necessary.
If you are willing to spend more and it is within you budget, then by all means go ahead and purchase the property. However just take note that not only will you deal with repairs and maintenance cost but other fees as well. Consider you budget and the benefits that you’ll get from these transactions.
Bottom line is purchasing a foreclosed property have its own advantage and disadvantages. Consider all the possibilities, be vigilant, inquire, ask and investigate before plunging in and committing to this transaction. Again it may be cheap but don’t overlook important details that could affect you in the future.
Credits and Source: — ” Thank You” —
The Pitfalls Of Buying A Foreclosure House – Amy Fontinelle