Buying a foreclosed home can seem like a dream. What could be better than getting a home for a fraction of the market value? Some may even say that the deals sound like they could be too good to be true. In some cases, those doubters aren't too far off the mark. There are some hidden dangers in buying foreclosure properties that, if you're not aware of them, could be disheartening and disappointing. If you are pursuing this route in buying your new home, be sure to look out for these hazards and hidden costs.
- Destruction of Property – A sad truth about foreclosure properties is that they have often been purposely destroyed. Sometimes the homeowners do this out of frustration over losing their homes, or out of simple carelessness when they realize their home is irretrievably gone after too many missed mortgage payments. If the homeowners have not destroyed the property themselves, there is also a chance that the home has been vandalized by other people because it has been left sitting empty.
- Poor Maintenance – If homeowners were unable to afford their mortgage payment, they almost certainly were unable to perform routine maintenance on the property. Problems can be as minor as a few leaky faucets, or as major as damaged roofing or central units.
- It May Be Unclean – A house being left unoccupied for a significant amount of time can mean it will be unclean, either through neglect on the part of the former owners or normal depreciation as the property is left uninhabited and not looked after. When a homeowner is selling the home, they will scrub the house clean or hire a cleaning service to entice buyers. A foreclosed home will not have this benefit. Depending on how long it was left and what condition it is in, there may even be vermin or termites to deal with.
- Undesirable Renovations – Sometimes homeowners were in the middle of a renovation when they lost their ability to pay their mortgage, so you can wind up with a half finished project on your hands when you purchase the property. There is also a chance that a garage or basement was turned into a living space to rent out in order to try and offset the cost of the mortgage.
- No Electricity – There is a good chance the electricity will be off in the foreclosed home, so you will have a hard time seeing what you are buying. Depending on the weather it may also be very hot or very cold in the house, and vacancy can take its toll on appliances left behind.
- Personal Property Left Behind – Many homeowners leave items behind, either because they now have no place to put them or because they were locked out of the house before they could retrieve them. You will now be left with the job of disposing of these items if you decide to purchase the property.
- Lack of Landscaping – More than likely, nobody has been maintaining the lawn of a foreclosed home. You may have a yard full of dead grass or a lawn so overgrown it seems like a jungle! Your foreclosed home will almost certainly require some degree of upkeep when it comes to to the landscaping surrounding the structure.
- No Disclosure – Because the owner of the property is a bank and the bank has not actually lived in the house, they have no idea what problems or issues there may be in the home and they have no obligation to tell you even if they did. You will have to get your own home inspection done to uncover potential issues.
- Stripped Bare – You may find your new foreclosed home completely stripped of appliances, copper piping, and anything else that might be worth money. Many times the previous owners do this to try and make back some money on their lost home. Other times, the home was broken into and robbed after the previous owners left.
- Judgments and Liens – Foreclosure properties can sometimes come with titles encumbered by judgments or liens that you may have to pay off to close on the deal.
In short, buying a foreclosed property can be a great way to save money. However, be sure to look into all the potential costs involved before making a final decision. Do the math to determine if you will really wind up saving, or if the property will end up costing you when all is said and done.
I have access to all the foreclosures in the area - if it's something you're thinking of doing, let me know and I can guide you through these questions and make it easier!