9 Tips For Buying A Foreclosed Home - The inventory for foreclosed homes is quite large and we’ve got 9 tips for buying one of these properties at ultra-low prices. However, remember that these type of listings don’t always offer the best deal.
A check-in with real estate professionals, home inspectors, and federal housing officials offers these words to the wise on buying a foreclosed property.
The first tip is to budget carefully. Don’t let a small price tag lure you into a quick deal. Be sure to ask yourself a number of questions: Do you have the money for the extensive repairs these houses often need? Do you have a crew. If you plan to rehab and then rent, can you afford the house if you don’t find a tenant?
Always see the home for yourself because you can’t buy them sight unseen. If you’re an investor from Chicago and you’re buying in Tucson, you’ll need someone to evaluate the house in person. Don’t accept photos that can be manipulated by light and temperature.
The neighborhood is another task to explore. You may not be able to recoup the cost of the repairs if the value of the house is depressed by widespread foreclosures or high crime in the area. As a buyer, you should study the neighborhood’s appeal at all hours, including at night.
Find out how long it has been vacant. The longer the vacancy the more damage there is, in most cases. For example, if a house hasn’t been “moth-balled” carefully, a long list of ailments set in. The plumbing seals dry out, sewer gases back up, and bugs that are in the sewer get a chance to get into the house.
Another important tip is to find it if it was winterized? Don’t turn on the utilities until you know the condition of the pipes. If the pipes cracked during a cold spell, water will leak into the walls, and mold could take hold when you turn the water back on.
Landscaping that hasn’t been maintained contributes to the deterioration of the house. Vines crawl into the windows, and tree seedlings send roots down into the foundation. It doesn’t take very big trees to mess up pavers, and dead branches can crash into the home.
The best tip is to contract for a private inspection. Banks generally require a home inspection when lending money for a mortgage. But even if you’re paying completely out of pocket for an ultra-cheap find, all the pros say it’s crucial to get an up-to-date inspection by a professional.
Consider a HUD house. The Department of Housing and Urban Development is currently holding approximately 39,000 houses whose previous owners held mortgages insured by the federal government. HUD houses go to market about six months after foreclosure.
Don’t expect to profit from a quick sale. Investors who buy intending to do as little as possible to a house, hoping to resell for a profit when the market turns around, may find little profit and a lot of headache. Some cities are cracking down on neglectful property owners, charging penalties that increase over time, and unmaintained homes lose value quickly.
But real estate pros and housing officials report that, overall, investors are a welcome and all-too-scarce resource, and most are fixing up the houses they buy for rent or resell. What’s more, investors and new owner-occupants might get the satisfaction of helping to turn a hard-hit neighborhood around.