While the housing market in most places has improved and the number of foreclosed homes on the market has decreased, buying a foreclosure will always be a possibility.
Popular television show on house “flipping” and investment real estate have given many buyers sometimes unrealistic ideas of what buying a foreclosed home entails. Here are some myths and truths about buying a foreclosed home.
It’s a hot deal
Many buyers believe that a foreclosed home will sell for a very low price. The truth is that these homes may be discounted somewhat, but the massive discounts people sometimes expect are unrealistic. While the “discount” may be well below what the former owner paid for the home, the discount compared to other similar homes may be more modest because of changes in the market itself. So, if the home is a “good deal” and does not require a tremendous investment to return it to a livable state, there is nothing to stop you from buying it.
Hidden liens
While the foreclosure process removes the former owner’s mortgage debt, the home may have liens against it for back taxes or money owed to mechanics or contractors. A thorough title search will reveal this information to you. Before making an offer to buy a foreclosed home, make certain you have this information at hand. Your real estate professional can help you uncover any financial challenges associated with past judgments and liens.
Poor maintenance
It is a myth that most foreclosures are homes where the owners simply walked away, but it is true that foreclosed homes may need some extra care to return them to their former state. When the original owner loses a job or has a financial or medical disaster that eventually leads to the foreclosure, their attention to maintenance and detail may decline simply because they are unable to do it. In addition, because the banking industry was slow to begin selling distressed properties, the home may have remained empty for several months or even years.
For example, homes that endure several seasons without electricity may be subject to mold and other environmental issues. Homes that rely on a sump pump to keep water from seeping in may have damage to basements or main floors from unchecked water. Roofs may have undetected storm damage or problems from backed-up gutters. Major appliances, such as air conditioners and furnaces, sometimes break down from lack of use.
Vandalism
While some angry owners may vandalize a home they are losing, most destruction occurs in empty homes. Opportunistic thieves believe that no one will notice missing light or plumbing fixtures, paver stones, and other easily accessible objects. Broken or cracked windows may be from a stray baseball or from a major hail storm. Damaged gutters can result from falling tree limbs and broken wiring might be a result os rodent infestation (yes, those pesky mice like to eat the insulation off wiring).
A thorough home inspection is in order before you buy a distressed property, even if it has not been empty very long. We can connect you with a professional home inspector who can give you an unbiased report of what your potential new home or investment needs. We can help you make sure that your “hot deal” really is a great deal for you.
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All statistics are gathered from the Buffalo Niagara Association of REALTORS®.
For more information – call our Myriad Team @ Keller Williams Lancaster at: (716) 650-0051
Thinking of selling your Western New York home? Interested in finding out the current market value of your single family home, condo or investment property? Then call us at (716) 650-0051 to discuss what is happening in today’s Western New York Real Estate Market. We would be happy to give you a personalized Comparative Market Analysis for your home or assist you to purchase a home.