Posts Tagged ‘foreclosure hints’

If You’re Buying a Home in Foreclosure, Watch out for These Situations

Monday, April 12th, 2010

With so many homes in foreclosure, people with some money available are jumping at the chance to get a great house at an unbelievable bargain. In many cases, this is the perfect way to buy that perfect home. Surprisingly, though, it may not always be the best financial decision. Following is a list of five pitfalls you may run into when considering the decision to buy a home that is being foreclosed.

Different Contract Procedure

If you buy a home that has been foreclosed, you’re dealing with a risk situation. Foreclosed homes are typically sold in “as is” condition. If you’ve ever bought a car with that stipulation, you have experienced how careful you need to be. With a property that has been foreclosed, you don’t get the advantage of the customary safeguards and buyer protective contract provisions that provide you with something to rely on if anything goes wrong.

Tenants Staying in the Property

Although it does not happen very frequently, there is a possibility that the previous owners of the house could return and claim the house. Sometimes, they may even refuse to vacate the home in the first place. The law will be your ally, but it can be a distasteful experience for you.

Condition of the Property

A foreclosed home can be a home in poor condition. If the prior owner had financial difficulties and was unable to make repairs, some serious repair work could end up being your responsibility. Defects can be hidden until too late to do anything about them, and they can be serious. It’s a good recommendation to get a home inspection carried out by a professional home inspector before you buy, so there aren’t any undue surprises later.

Lien Problems

You have to consider that although you may be seeing what seems to be a great deal on the property, unpaid tax bills and other problem situations such as old unpaid debts for things such as association fees or repairs or remodeling done a long time ago on the property, could push that price up and make it equivalent to a non-foreclosure home. You may be required to pay any taxes or liens that the previous owners left behind. In that case, your risk is greater without even getting the peace of mind that is associated with a traditional home purchase.

The Home Could Be up for Auction

Often, a foreclosed property is auctioned off to the highest bidder. It can disappear after you have set your sights on it. In order to buy at an auction you must have proof of financing along with 10 percent down on the spot. This can be disheartening for someone who isn’t prepared to shell out the amount of cash that is needed all at one time.

Buying a home in foreclosure, as a reminder in closing, can still be a good deal despite the problems. You can eliminate some of these traps by simply doing some investigating before jumping into the purchase of a foreclosure. A licensed Realtor can also help you make the best decision.

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