Everyone who is looking at the home buying process in this economy is aware of the
foreclosures that are popping up across the country like a bag of Orville Redenbacher. Foreclosed houses are usually going for a lot lower than other homes and are therefore pretty popular. Before you jump head first into the idea of purchasing a cheap foreclosure please be knowledgeable of the facts of foreclosures.
Non disclosures- In all bank owned foreclosures, the back will not inform you of any issues that occur with the home. This includes termites, mold, internal and electrical damage, etc. If you decide to bid on a foreclosed home, please be sure to get a thorough home inspection and an estimate of the price of any damages that must be fixed. You do not want to purchase a home for $40,000 and have to do $50,000 worth of repairs when you could have purchased a new or nearly new home for $100,000 without any of the issues.
Take into account the state of the home, slightly- This part is a little tricky. The biggest mistake that foreclosure samplers can make is walking into a home and immediately being turned off because of some trash in the corner or an oddly colored room. When looking at a foreclosure you are looking at a home that has been lived in previously, and most likely, moved out of quickly. Some trash and some personalization of the house must be expected. You can change this with a little elbow grease (or a little money for someone else to use some elbow grease).
On the flip side of this coin, dont look so far past some internal damage, that you get yourself into a deeper hole than you are willing to take on. Lots of foreclosures are destroyed out of anger by the previous homeowner. I have personally seen some with cabinetry destroyed and all appliances taken out of the home, including some of the toilets. While the
foreclosures may cost $20k new appliances, new cabinetry, and new plumbing are not cheap. Take note of all things that need to be fixed and do research to get an estimate of the costs of the total repairs and items needed.
MOLD! Due to foreclosed homes not having anyone take care of them, mold is a big issue with the evacuated homes. Mold is a major health issue that can be difficult to get rid of and keep away if not done carefully and thoroughly, so if a home has mold in several places please reconsider.
Foreclosures can be a godsend to the thrifty first time home buyer, and you can get a lot of bang for your buck. However, foreclosures make the home inspection and the process of informing yourself on the houses history necessary. Good luck, and stay a step ahead!
