Guide to a Foreclosure Homes- knowing about common pitfalls and tips

Why buyers pick Foreclosure Homes?

Some buyers with limited budget commonly look for Foreclosure homes; this is because of the low prices. They attend these kinds of auctions to get great deals, which can suit their budget. Here you lowest bid can owe you homes below market value and lesser than the price encrusted by property agents.

When do the problems arise?

The only problem in buying Foreclosure homes- is that you cannot inspect the house before you buy it. Now, it’s your decision to buy a house that you are not allowed to inspect. Or you think low price deal is sufficient to compensate for the work that might be needed in order to make the home livable. Sometimes things become difficult for those you go for low price deals before inspecting it personally. If you are buying the property which is pre-occupied, then its previous owner’s responsibility to remove the occupants, they can be relatives or friends of the owners, renters or squatters. If the previous owner does not fulfill his duty then you have to proceed with the eviction process. In some cases, pre-occupants may retaliate during eviction process. You can higher a lawyer to deal with eviction, which can be a long process or else you can pay or bribe the pre-occupants to leave your area of property. If pre-occupants are too old or physically unfit- you can also find a house which is of same square feet area and ask the pre-occupant to leave.

Tips you should keep in mind before you buy Foreclosure Home.

1. Foreclosure Homes are auctioned to higher bid- before you attend any of these kind of auctions the mortgage company will check you financial condition- whether you are credible to bid and  you must carry a minimum ten percent cash deposit before they select you to appear in the auction. But, if you don’t want to share your financial details then you can just watch the auction.
2. Foreclosure Homes don’t include cover repair and service Charges- when you are buying any foreclosure home you are not allowed to inspect; so, think why the previous owner didn’t pay the loan installments on time or what can be pre-owners issues to the property auctioned. There can be two reasons, one being that they became bankrupt with no money left to pay the installments; second reason can be that they were unable to meet the maintenance cost of the land. Sometimes, you are allowed to inspect the foreclosure home but all the electrical points would be switched off. So, you don’t know whether applies in the rooms and kitchen is in working condition or not. Some times, pre-occupants might have damaged the property before vacating- i.e. they did not clean the carpets or broken the appliances. Before you buy foreclosure property remember to calculate all these miscellaneous cost.
3. Eviction process in Foreclosure Homes- sometimes the property auctioned is already vacated by the earlier occupants; it can be original owner or relative of owner, friend or tenant.  But if the pre-occupants have not vacated the property, it might be your problem to proceed with the eviction process. Mortgage companies will not pay the eviction charges either they will take care of the eviction process. Before signing the deal check whether mortgage company is willing to help you with eviction process or not.

Common pitfalls related to Foreclosure Homes-

Inspection not allowed- the first, and major problem in buying a foreclose homes is that buyer is not allowed to inspect the property. The buyer does not have any kind of warranties with respect to the state of the property and more on the ownership of property and this also includes damages on the appliances and interiors. Second disadvantage is that- you are not aware why this property is being foreclosed. Whether owner didn’t meet the financial expenses attached to property or didn’t pay the bank installments for months. The reason might not be visible to you. Third drawback is structural issues- like leak in roof or leaky water connections, a ceiling has been recently painted or not, wiring, the furnace, any water damage or fire hazards; you are not aware of any of these issues.

Buying of Foreclosure Homes comes with the numerous drawbacks, but the major factor of Price would tempt many buyers to fall for the deal. The process of buying foreclosure homes is doing a gamble-you do not know you will win or lose, just have to believe in your faith. 

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