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Buyers Beware with Foreclosures

Foreclosures. For many investors as well as buyers, this one word sounds like treasure. Most people who think about purchasing a home that has gone into foreclosure see themselves getting a home for just a fraction of its value.

There is no denying the fact that foreclosure homes can offer extremely low prices. If you are looking for a deal when it comes to buying a home, this is probably one of the best ways around to get a low price.

As with everything in life; however, it is important to keep in mind that you get what you pay for and when it comes to foreclosures you should be aware that you are truly buying at your own risk.

Foreclosures have gone on the rise in the last few years as many homeowners discover they simply cannot afford the cost of their mortgage payment, either through the loss of a job or some other dire situation. Due to the low prices and large inventory, foreclosure homes can be quite tempting to many home buyers.

Even so, it is important to keep in mind some of the problems you might run across when buying a foreclosed home. One of the biggest problems for many home buyers is that they find they may not be able to obtain a home inspection prior to the purchase. This is because many foreclosed homes are literally sold on the auction block. Lack of a home inspection can create multiple problems. Not only are you taking a huge gamble as to what could potentially be wrong with the home, but you may also experience problems finding financing for the purchase as well. Many lenders simply are not willing to make a loan on a home without both an appraisal and a home inspection.

Of course, you can always look around the outside of the house but that likely will not give you a good idea of what kind of condition the home is really in and what kinds of repairs you may be facing is you do purchase the home.

When buying homes in foreclosure, it is also important to make sure you know exactly what you are buying. Some buyers have found themselves in the situation of mistakenly purchasing a second trust deed and finding out after the fact that they must still pay for the first trust deed before they can actually take the time for the home. This can oftentimes amount to thousands of dollars and can suddenly make what might have appeared to be a good deal, a very sour deal indeed.

You should also be prepared for the fact that the previous owners may still inhabit the home. Just because the house has been foreclosed upon does not necessarily mean that the previous owners have actually moved out. This means that you may have to bear the responsibility of evicting the residents and that can be stressful, time consuming and expensive. You also run the risk of the residents destroying the property when you attempt to evict them as well.

In addition, if the home is to be sold on the auction block, you must also be prepared to bring in a cashier's check. For many would-be buyers this opens up an entirely different set of problems.

While foreclosure homes offer very tempting low prices, it is important to keep in mind that in order to protect yourself, you really need to make sure that you tread carefully and take precautions to protect yourself. Whenever possible, always make sure that you have an inspection performed and if that is not possible make sure you are prepared for the fact that the house may end up costing more than you pay due to necessary repairs. Do your homework and make sure you know whether you are bidding on the first trust deed and whether any other problems exist so you will not be caught unawares. Drive by the house several times to determine whether it is inhabited and find out what is needed to evict someone in your county. Buying a foreclosure could save you thousands of dollars, but make sure you take the time to do your homework first to minimize risks.



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