All about Buying a Foreclosed House

Total (1) Comments by tracy on 13. October 2008 21:11
A recent New York Times article discusses how foreclosure has also reached homes in premium localities. It may seem very tempting to buy a foreclosed house, but be very wary of what you are getting for your money. What you see is not what you may get!

Remember that a foreclosed home means the owner defaulted on payments. The property is then put for sale by the financiers or lenders to recover their investment.

However, it might involve people living in the house at the time of sale, and, apart from eviction problems, there are other matters that you should look into if you are considering purchasing a foreclosed home:
  • How to find a foreclosed home? Usually these are advertised in the local media. Another pointer to a foreclosed property is the default notice. Information can be found in the local courts and at times, attending a court auction can help you choose a foreclosed property at a good rate.
  • Check out the website of the U.S. Department of the Treasury for more information on online auctions and sales at http://www.ustreas.gov/auctions/ or http://www.govsales.gov for information to buy U.S. Government property.
  • Don’t jump at getting a good bargain. Remember, a foreclosure is likely to be preceded by lack of maintenance. You need to check if the house is in a livable condition or not. This includes uneven floors to leaking roofs and poorly maintained plumbing. The advantage gained in a bargain may be easily lost in the volume of repairs needed for a long-neglected home.
  • Depending on the location and state you are buying in, you will need to check the kind of foreclosure on the property: is it a judicial foreclosure or a non-judicial one? This means researching local laws involving foreclosed properties.
  • Check for liens and unpaid fees such as property tax. These can eat into your budget and increase the cost for what otherwise seems like a value-for-money purchase.
  • What is safe: buying from the lender or the owner? Foreclosed properties may go back to the bank and if you are a first-time buyer, it is better you deal with the bank.
  • Is there an appraisal fee involved? If you deal with the bank, there is less risk in terms of unpaid taxes and fees. The bank will usually conduct an appraisal itself.
Foreclosed property has to be purchased on an “as is” basis, often without even being given a chance to inspect the house from the inside. Try to find out as much as you can about the occupants and the house itself before you put your money into a foreclosed property.

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Categories: Foreclosure Counseling | Housing Counseling

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