Everyone loves a bargain, right? Homebuyers everywhere are looking for great deals on homes which has led many to look at foreclosures. Sadly, a foreclosure is often times not all it’s cracked up to be. It can be a very risky purchase.
More often than not, foreclosures are sold in neglected condition. Many of these homes need extensive repairs. Something buyers don’t always think about that initially because they think they got a “great deal.” A bank owned property does not include property disclosures which tell the buyer of issues that an inspection might miss. After all the repairs are completed your property taxes will have gone up because the value of your home did. The money the buyer thought they saved went to cover the cost of repairs and increased taxes.
Many lenders do not offer financing for a foreclosure. Due to the fact that these homes require so much repair they sometimes won’t pass a home inspection which makes it ineligible for certain types of financing, like FHA loans. They also have a tendency to come in with extremely low appraisals. Several loans have stipulations regarding the condition of the home and require certain repairs be done before the loan is given. Purchasing a foreclosure can take a lot more time than a regular purchase, which can also effect financing. If your approval expires, your rate could increase, making the house less affordable than originally planned.
Finding a Realtor who is knowledgeable about foreclosures is crucial. An experienced Realtor can also help you find a Lender that will handle a foreclosure. Finding a great home inspector who will be on the lookout for unseen damage will be a godsend in the foreclosure process. Keep in mind not all home repairs are cosmetic.
Of course many people have purchased a foreclosure and lived happily ever after. Do the research before jumping in. Guard yourself with information and experienced people in the business to guide you every step of the way. Be prepared to have patience and be open to surprises.
Wolf & Shore Law Group handles many residential real estate closings and would be happy to work with you through yours. If you are looking for a Realtor or a Lender for your purchase, our attorneys can also lead you in the right direction.
If you would like our assistance in the homebuying process contact us at 203.745.3151, or info@wolfandshorelaw.com.
