It happens, unfortunately, all the time. Foreclosures. Here are some tips for when considering a foreclosure purchase:
- Invest time in research and preparation. Those new to the field should spend some time learning the variables of foreclosure investing before making any purchases.
- Budget carefully to prepare for the unexpected. The house may require unforeseen repairs, such as a leaky roof or unstable deck. The price tag of the home itself is often just the first of a series of fees. What if you planned on rental cash flow to cover the mortgage, but you can’t find a tenant?
- Avoid buying a foreclosure sight-unseen. Try to see the house yourself before buying it, or hire someone to evaluate at it in your absence. Distant investors are buying up properties unseen in bulk, and they’re often unpleasantly surprised at how much they’ve been misled.
- Evaluate the neighborhood. If the foreclosure is rife with problems, but it’s in a desirable area with high property resale values, it may still be worth it to make a low offer. An area with several foreclosures or a high crime rate can undermine an otherwise good deal, however.
- Consider how long the house has been vacant. Building damage – and the costs required to make the house livable - generally increases with the time that has lapsed since the last tenant vacated. Pests are a particular issue in houses that have been empty for a long time, and plumbing defects and leaks increase in likelihood in such homes, as well.
- Examine the landscaping. Left unchecked, trees can send their roots into the foundation, and vines can creep into the windows.
- Has the house been professionally inspected by Alliance Home Inspector? Foreclosures can be notorious for damage suffered at the hands of past tenants, through both inadvertent and intentional vandalism and theft.
In summary, there are a number of ways to go about buying a foreclosed home, and buyers should exercise patience, persistence and careful planning before buying foreclosed properties.
If you have more questions regarding inspections and foreclosure purchases, please click here.
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