Drawbacks of Buying Foreclosures
The low priced advertised properties are a great attraction for the price conscious home-buyers. They wish to stand up in the auction and to win the lowest bid to get a good house for investment. Many of the homes advertised as foreclosure are not available for inspection prior to purchase. Does it make sense to purchase a house that is not available for inspection? You need to think that does the home price compensate the repairs that may require to make this home worth living.
Before you step forward to buy a foreclosure, wait and think about some of the drawbacks and ramifications if the house is not available for inspection.
Who Is Living at the Property?
Typically successful bidder is responsible to remove the occupants if the house is occupied, who may not be the previous home owners. They could be relatives or friends of the owners, renters or squatters. You might have to evict them. If you are buying a foreclosed property, then you have to make the arrangements to evict the home.
- You must hire a lawyer or get some legal help to remove the occupation if you are not familiar with the eviction process.
- Be aware that tenants who are sued for eviction sometimes retaliate.
- A better solution might be to pay or bribe the occupants to leave.
Non-Owner Occupied Homes
There are chances that the foreclosed home that you have purchased is rented and the sellers is unaware that his deed to trust contained an “assignment of rents”. It means the lender had a right to collect the rent if the owner did not pay the mortgage installments. In this case if the home is marked as a foreclosed, then be careful about tenants.
Condition of Foreclosed Homes
Because the homes are purchased “as is” from the lender or HUD so there is no guarantee of condition. Sometimes it is possible to inspect the home, but sometimes there are not possibilities to inspect the home, so it is compulsory to have some idea about the condition of foreclosed home before making a purchase. When sellers realize that they are going to lose their home due to foreclosure it is common that they stop paying attention to the maintenance of home.
There are chances that the following things can happen to foreclosed properties.
- Home owners are not going to fix if something breaks or malfunctions.
- There are chances that they may destroy the house deliberately if they are angry or desperate. An effective way to flood the home is to turn on all the water faucets, plug the drains and leave. Others smash out walls, then pull out the copper pipes and wiring to sell as scrap metal.
- Home owner may also sell the kitchen cabinets and appliances.
- Some horrible-excuse-for-human beings even leave animals behind, locked inside without food or water.
Foreclosed homes are not always as discounted as the buyers think. Homeowners in pre-foreclosure stage may demand a price higher than the home worth to clear the mortgage amount and taxes. Banks are looking to recoup at least what’s owned on the house, so they may only offer a slight discount.
If you are going to buy the home at some auction you may need to make the huge cash payments that can create a problem for you.
Foreclosed homes may need a huge repairs as they are not available for proper inspection. The previous owner might not have been able to afford fixes for the property and may have allowed it to fall into disrepair.
Because the foreclosed homes may be vacant for a number of days or months so they may be not well maintained. In this case, you may have to huge expenses on maintenance that can increase you cost.
Some foreclosed homes may have more than one mortgage loans. In this case, you need to be very careful and have to research about the old debts and lien attached to the home you are going to purchase.
Buying a foreclosed home needs to consider a lot of things and it is recommended that first time homebuyers don’t go for foreclosed home as they may create a bunch of problems for them. It does not matter how many seminars you have been attending and gain the training, you need to be really careful when buying a foreclosed homes. It has been proved that foreclosed homes have a number of problems attached to them that the first time homebuyers may not be able to deal with an ease.