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.