Dangers in Home Foreclosures
Be wary foreclosure pitfalls. Photo Credit: Crissies Comments
What to watch out for when you buy foreclosed
Foreclosures seem awesome for first-time buyers. A great house at a fraction of the price. What could go wrong? A lot. There are some major problems with foreclosures that you should investigate before signing the paperwork and holding the key.
You’ll need the whole amount up-front. Most foreclosed homes are still on shaky financial ground. For that reason, most lenders want to see all the money if you expect to own the house.
Inspect the entire house. Sometimes, foreclosed houses have boards on the windows and permanently locked doors. Don’t buy without looking the whole house over—top to bottom. In fact, don’t just settle for a visual inspection on your own. Hire a pro to do an inspection. Foreclosed homes typically have not been cared for or maintained, and often have serious structural problems.
Think again about location. You know the three rules of real estate—location, location, and location. Foreclosures are less frequent in great locations. What this means is that you should not let the joy of a very inexpensive home overshadow your thoughts on the location of the home itself.
Take a long, hard look at the repair cost. Though foreclosures are cheap, repairs are expensive. Which is better: paying a bit more for a house in good condition, or paying a lot less for a house in shoddy condition, and then shelling out a whole bunch on repairs? Think also about the time factor involved. Is the house livable today, or will you need to wait a long time before the repairs have been finished?
Foreclosures are awesome, indeed. Just check for hidden reefs before diving in. Buying a house is a very, very big deal.
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