Given the current rise in foreclosures in today’s market, coupled with declining real estate prices, one person’s misfortune can become another’s fortune. Whether you’re looking to buy a foreclosed home as your first (or next) home or as an investment property, now might be the time to look into foreclosures as there are many more available than in years past and prices are at their lowest ever. However, before you make the decision to sign on the dotted line, make sure you are completely comfortable with the physical condition of the house.
Perhaps the biggest caution when buying a foreclosure is the fact that foreclosed homes are sold “as is,” which means potential buyers should be on the lookout for potential problems before committing to buying the home. Buyers should always err on the side of caution and operate under the assumption that if a home is in foreclosure, the previous owner probably did not have the funds to maintain it, leaving the possibility of more money, headaches, and time invested. in making repairs. .
This would suggest that there should be a trade-off between the sale price and the amount of additional time and money invested in the work to be done. Keep in mind that the banks aren’t in the real estate business and didn’t want the house to begin with, but they’re not going to lose an arm and a leg in negotiations over what they consider to be minor repairs, especially since foreclosed homes They are already listed below market value. This gives potential buyers a cushion when it comes to making repairs.
In light of this, potential buyers should always have the home inspected by a professional to make sure no major repairs are needed to the foundation, roof, air conditioning system, plumbing, electrical, or major appliances. In most cases, banks are willing to negotiate the prices of foreclosed homes if a major repair is needed and the repair was not factored into the sale price, but usually not so much if they were aware of it. of the problem and have already priced the house accordingly. That being said, it is up to the buyer to do their due diligence to ensure that the condition of the home is satisfactory to them before committing to purchase.
When buying a foreclosed home, there are three ways to buy. The first is when a home is in pre-foreclosure (buying directly from the previous owner), the second is through an REO (buying from a real estate agent), and the third is when you buy the home at auction. The first two are more common among people who are interested in living in the house, while auctions are more common among investors, although this is not a strict rule. Whichever method you choose to purchase your home and whatever purpose you buy it for, make sure you’ve done your homework on the repair job to save time and money.
