Most of the times, purchasing a home turns out to be less exciting and more daunting, especially for those who run on a low-budget. In such a situation, while some may choose the road of ‘sell my house fast for cash’, others prefer buying a foreclosed property as an appropriate option.
For those who don’t know, a foreclosed property is the property which a bank auctions when it fails to recover the amount of loan given to its owner. One of the best advantages of purchasing a foreclosed property is that it always comes with a lower price as compared to those listed in an open market by owners or agents.
So, if you are considering to buy such kind of property, here are some essential factors that you must keep in mind.
Get A Professional Home Inspection
One of the essential factors that you must keep in mind is that a foreclosed property does not undergo any transformation before it is listed on the selling list. It is possible that the property might have some prior damages. Therefore, ensure that you conduct a thorough house inspection before you nod your head in affirmation. Keep in mind that you will not get a chance to communicate with the owner directly; hence, you will have to discover repairs or damaged areas on your own.
Usually, defaulters are well aware of the possibility of losing the property ownership; thus, they end up neglecting the maintenance of it, which in turn makes it even more important to review the property thoroughly. Obviously, you wouldn’t want to buy the property at a lesser price and then end up paying a huge amount of cash for home that you considered cheaper
One of the easiest ways to do so is by appointing an expert advisor for the house inspection. Take a trip to the house with the advisor. Ask him questions and take his opinions. Make sure you are satisfied with the end result.
Property Condition
Another factor that you must not forget is reviewing the condition of the property and assessing its market value appropriately. Since there is no owner sticking out a board stating – ‘sell my house fast’, there wouldn’t be any chance of one-on-one conversation. While it is difficult to neglect the need for repairing, you must ensure that those repairs add value to the asset. If it needs extensive repairing, then it is recommended to avoid buying it altogether.
For instance: there are properties that may only need painting, and then there are such properties that may have diagonal or horizontal cracks, which may cost a lot to repair.
Other things that you must gauge on the property include termite infestations, water stains or leakage, rotting woods, pipeline damage, flood line, etc. Not just that, but you must also keep a tab on sewage, electricity, and water system of the property to ensure that these aspects are good to go with. If you are hiring a professional investigator, it would be easier to find these defaults on the property.
Don’t Go It Alone
When it comes to purchasing a foreclosed property, obviously, you cannot take any risk with its aesthetic condition. While as a layman you may end up missing some major points, having a professional by your side will make things easier. In such a scenario, instead of choosing any other real estate agent, choose the one who specifically works with banks for foreclosed properties. He would be much more experienced in assessing the value of the property as compared to any other person. Not only an experienced agent would evaluate every nook and corner thoroughly but will also give you the right guidance on whether you should buy that property or not.
However, now that you are hiring an expert agent, you must not misinterpret him to be a lawyer. The rules and regulations for foreclosure properties can be complex and may vary from a place to place; hence, you must not rely on the agent for a worthy advice in the legal department.
Know your stuff
When you buy a property, regardless of whether it is foreclosed or a normal one, it is essential to know what you are getting yourself into. While the cost is important, there are other several factors as well that play a major role in deciding the worth of the property. One of the important factors is the location. Since the location can influence the selling price and rental rates, you cannot afford to neglect this aspect at any cost.
So, before you confirm the deal, check whether the property is located in a high-growth area. Even if it is not in that area, see what is the future growth rate of that locality? Other than that, check out accessibility, utility, security, etc. Moreover, you must also make sure that the location is in the proximity of stores, schools, churches, market, hospitals, etc. An area that is prone to flood or have high rates of crimes would not churn out any good for you.
Buying at Auction Is Much Difficult
If a foreclosed property has enticed you enough that you are ready to put everything at stake for it, then that’s well and good. However, it is always recommended to avoid buying it from an auction. More so, if you are a novice in the market for foreclosure property, you must not secure a house from an auction.
Most of the times, an auction process is filled up with several major risks. For instance: you might be denied the authority to investigate the house or its previous records, bidding with other professionals may simply result in the wastage of time & efforts, or you may have to pay the entire amount in cash. In worst case scenarios, you may even be held liable for paying back due taxes or other finances related to the property. While the rules of auction procedures may vary, the risk factor always remains there.