Do you know of any tips or downfalls when buying a foreclosed property?
Any issues I should be aware of? (like back taxes, liens, second mortgages etc)
Did anyone buy a foreclosed property and what was your experience? Would you do it again?What would you do differently the second time around?
Thank you in advance
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I bought my home just over a year ago, and it was a foreclosure. I got a good deal on it, but it was in pretty rough shape. I had to spend some money to fix it up, but in the end I got a good deal. Some things to keep in mind:
Using an agent is probably a good idea with foreclosures. They are putting their reputation on the line, and their job is to advocate for you. They can also use MLS to find good prices in good neighborhoods, so you aren't wandering aimlessly or reading papers hoping to find a good deal before anyone else does. A good agent does their homework on the property, and will tell you if anything is amiss. Ask around to see if anyone can recommend a good one.
Liens and other claims on the property should be cleared before you even hear about it. When you go to close on the sale, the title broker will set you up with title insurance as part of standard closing procedure. The title insurance protects against any liens or other claims on the property.
I would recommend getting a handy and knowledgable friend or family member to check out the property with you before you make a bid. Look at everything, and take it all into account. How old is the furnace and water heater? How is the plumbing? Is the foundation sound and free of cracks? What shape are the windows in? How is the brick work or siding? How much will you have to spend to fix the place up, and how much are you saving on buying this foreclosure? Make sure it's a good deal.
Plan ahead. If you are going to need to do a lot of repairs, make sure the place is liveable before you plan to move in. If you have to do repairs, how long will they take? What can be worked on while you live there, and what is high priority and needs to be done immediately?
I hope these thoughts help.
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I have neither personal nor professional expertise in this area. I rely solely upon common sense.
Neighborhoods tend to be homogeneous. What afflicts one family may well afflict others. It is one thing to find one foreclosed property, it is another to find a foreclosed neighborhood. The implications for future valuation are obvious.
Secondly, with respect to the one foreclosed property, how long has the foreclosure been anticipated by the the "owner?" A long time, I suspect. And how well will the prospective evictee have treated the property? Probably not with respect.
This is an area in which those closely connected to civic politics may make a fortune. Redevelopment and all that; but for the average punter, stay well away.
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