Unlocking the Hidden Gems: Master the Art of Buying Foreclosures
Buying a foreclosed home can be a huge advantage for low-income home buyers, as foreclosed homes are often listed at a significantly lower price.
You may have already heard about people who managed to get a home for a fraction of the price, yet you never know how that works, and we’re going to explain it to the best of our ability.
That being said, buying a foreclosed home is much more complicated than you’d imagine, and if you’re looking to get one for yourself, you’ll want to research the market for them thoroughly.
We’ve compiled a list of things you should keep in mind with these homes, and if you keep reading you’ll learn all there is to know about buying these low-cost homes, as well as what you should keep in mind when attempting to purchase one.
The condition of foreclosed homes
Most foreclosed homes aren’t maintained too well, and you shouldn’t be surprised to find that the home is in horrible condition only after you’ve purchased it.
A common thing with all foreclosures is that you won’t be able to see the home until after you’ve finalized the buying process, and you should always be prepared for the worst.
The fact that the previous owners were struggling with finances can usually indicate that the home wasn’t well preserved, as they would probably still own it if they were able to keep it in good shape.
At times, foreclosed homes can be vacant for years, which usually draws in squatters as well as water damage and disrepair that can happen after extended periods of time.
Other times, the previous owners may even destroy the home on purpose, as a result of hard feelings that were created due to the foreclosure itself, so keep in mind that the chances of purchasing a destroyed home are much greater than finding one in good condition.
Once people figure out that foreclosed homes are priced extremely low due to the condition they’re in, they often wonder whether the bank/lender will actually assist them with the repairs.
Unfortunately, you’ll be disappointed to find out that the bank never involves themselves with the repairs on foreclosed homes, and instead, this process falls on the buyers.
On top of this, they’re never required to give you any additional information on the condition the home is in, and you’ll just have to find out only after you’ve purchased the home.
Even if certain repairs are performed on the property, you shouldn’t expect that they’ll be credited or that they’ll be done in a way that’s in line with how you imagined the home to look like.
Hire a high-quality inspector
The idea that foreclosed homes are often found in terrible condition cannot be overstated, and you should always go into purchasing one with the mindset that what you’re getting won’t be an inhabitable property.
In order to evaluate a property that’s in this condition, you’ll want to hire a professional with experience in evaluating foreclosures and other types of vacant properties.
You may find that the cheapest inspectors aren’t the best option, especially if you’re looking to purchase the property as a form of investment.
Another thing to take note of is that you should also attend the inspection, which may clear up any misunderstandings that would happen otherwise, and it’ll also give your inspector a chance to properly explain all inadequacies in full detail.
If you’re already spending thousands on a home, a couple of hundred dollars extra on an inspector won’t hurt you, and you’d do well to ensure you’re getting the best service.
If you’re attending an auction, you should know that you’re not going to be the only one bidding on the home in question, and most of the time you’ll be facing investors with cash in hand.
At times, an FHA loan won’t be allowed for foreclosed homes, and you may have to pick from other financing options on the market.
Keep in mind that some loan programs won’t allow for the home to be in terrible condition if you wish to receive assistance with purchasing it, meaning that your financing options for a foreclosed home are even fewer.
However, if you’re going into the purchasing process with sufficient cash to purchase a property, you’re not likely to run into many problems, save for a couple of other investors who may be able to price you out of buying the property.
Foreclosures can be an excellent option for anyone looking to invest in the housing market, but purchasing these properties is akin to gambling.
You never know what condition the property will be in once you’ve acquired it, and you’ll always have to be prepared for the worst.
Usually, the home you purchase will be in dire need of repairs, and you should keep this in mind before you decide to cash out on one of these properties.