If you’re thinking of buying a foreclosure, your main reason is obviously that you’re going to get a really low price. But is it a good deal? Maybe. Before you jump in feet first, though, there are a few things you’ll need to think about. First and foremost, there are almost certain to be issues with the property. If there’s nothing you can’t live with in that regard, there could still be difficulties with the purchase.
Right now, in some areas of the Country, you can buy a house for a dollar. But would you want to? Some issues with foreclosure properties can be extreme, others not so much. Here are some things you’ll need to consider:
Poor Maintenance: The former owners were unable to pay their mortgage, so the likelihood that they kept up repairs on the house is pretty slim. Even something like a minor leak under a sink could result in problems with mold. A bigger problem, like a leaky roof, could cause major damage, and the longer the house is unoccupied, the worse it’s going to get.
Random Acts of Vandalism: Sometimes vacant properties become targets for vandals. Windows may be broken, fires could be set, and there could be graffiti. Actually, this could make your decision easy – do you really want to move into this neighborhood?
Vandalism by the Owner: Losing one’s home is a stressful event, and not everyone takes it well. If the previous owners are locked out, they might break in to retrieve personal items. If they are feeling resentful, they may do damage to spite the bank.
Items Removed or Remaining: Financially desperate former owners may remove items of value – not just appliances, but doors, sinks, copper piping, etc. If it’s not the owners, it could be thieves (again, think about whether this is where you really want to live). On the other hand, clothes, trash and damaged furniture could be left behind, and when you buy the home, they become your problem.
Poor or Incomplete Renovations: If the owners had a change of financial circumstances in the middle of a renovation, you may find yourself in a “finish it or undo it” situation. Also, a lot of homeowners, when hard times hit, decide to bring in renters to generate more income. A very common renovation in cases like this is to re-do the garage. It’s hardly ever done in a way that’s going to please a new owner, and often the proper permits haven’t been acquired.
No Electricity: Unless the bank kept the power on, you will have trouble actually seeing what you’re thinking of buying. There’s no flashlight in the world powerful enough to reveal all the problems in an unoccupied home.
Problems with the Purchase
If you feel that there are no issues with the property you’re not willing to handle, you could still have problems when it comes to buying. You’ll need to think about the following:
No Disclosures: The former owners are long gone, and the bank may not be aware of every issue. You’re going to have to conduct a rigorous examination – maybe even call in a building inspector. You could also ask the neighbors if they know of any problems with the property, but again, they won’t know everything.
Financing Difficulties: You could have difficulty finding a lender for a property that’s appraised at less than the purchase price.
You could get a great deal on a foreclosure. Just be sure that you don't overlook potential difficulties in your pursuit of a bargain.