In the Know: When to Avoid Purchasing a Foreclosure Property
When looking to acquire a new property, whether it be for personal use or investment, there are a lot of options out there. One of the most popular options in many real estate markets today is the option of a foreclosure property. Foreclosure properties can be great as they generally cost a fraction of what they would normally sell for when sold on the more traditional real estate market. There are, however, a number of pitfalls that can be associated with them, ranging from hidden problems too expensive renovations. Here are a few common problems found in foreclosure properties that might lead you to reconsider your potential purchase.
Vandalism
It is not uncommon for a property that has been foreclosed on to sit vacant for a lengthy period of time. This is due to the fact that often foreclosure deals are made through the bank, and therefore can take a longer time to be completed. Because the former owners obviously, are no longer in ownership of the property or allowed to live there, the property ends up empty for however long it takes for the bank (or lender) to find a new buyer.
Neglect
A lot of the time, a property that has been foreclosed on has not been paid much attention to and is need of some major TLC. Common signs of neglect in a foreclosure property include mold, dust, grime, weeds, cracks in the windows, or doors off the hinges.
Water Damage
Due to the fact that foreclosure properties often sit empty for long periods of time, and that they are generally not the most well-kept properties, it is not at all uncommon to come across water damage of some sort. This might be found in the form of mold, or even cracks in the foundation.
Unfortunate Renovations
In some cases, homeowners that are aware of their impending foreclosure decide that they should try to sell the property themselves in order to pay off the debt, and try to salvage their credit as much as possible. While this is not necessarily a bad idea in all cases, it can lead to problems. These problems occur when homeowners attempt to renovate their property, whether it be the kitchen, the bathroom, or the entire thing, on an unrealistic budget, and without proper knowledge or time. Bad renovations can be the most frustrating thing for both buyers and sellers. This is because those renovations that were just done in hopes of helping the property to sell, can often actually lower what the home is worth, and when done incorrectly, and unsafely often end up costing the new owner, even more, money to fix.
Time
Foreclosures are not a good option if you are on a tight timeline. While you might be able to get the property for a much lower price, often it takes a much longer time to secure the property than it would buy a property in the more traditional way. If you do not have time to wait to hear from the banks and lenders, and negotiate with them, odds are a foreclosure property is not for you.