Everyone thinks that buying a foreclosed property is the best way to get a “deal” in today’s market. Well, maybe, but maybe not.
To get to the point of being a foreclosed property, the original owner had to stop making payments for some time. It stands to reason that if they were no longer making payments and knew they would lose the home, that they would also no longer do regular maintenance and repairs. Why would they?
So in most cases you can expect a foreclosure to need a little or a lot of work.
- Things like air conditioning systems usually haven’t been serviced or even had filters cleaned in some time.
- Small leaks may have become larger ones.
- Wood rot issues have not been addressed.
- If the seller was REALLY unhappy about things he may have even damaged the home, or taken away anything he could carry – including appliances, light switches, and plants.
The bank typically sells foreclosed homes “as is”, meaning they are not going to replace missing appliances or make repairs. So the seller has to plan on being able to do (and to afford to do) all those things after closing.
Depending on what is wrong with the home, the home may not qualify for certain types of financing. Meaning that the new buyer will have to put down a higher down payment or even pay cash for the home.
Companies that specialize in selling foreclosed homes do it because the VOLUME of transactions makes them money, not because they make very much on an individual home. They are incredibly busy and will not have the time to answer every question in a timely manner so don’t expect the best in customer service.
All that having been said, there ARE some great deals out there on foreclosed homes if you are prepared for all the obstacles in the search for them. The old saying “buyer beware” has never been more fitting.