Many people dream of having their own property but few people have the enough capital to own one. If you ask people about tips on how to have a property even if you are low in cash one of the tips they will give you is to buy a foreclosed property. However like everything else, the potential financial rewards don’t come without hard work.
Problems With the Property
The most important thing to understand before jumping into the foreclosure market is that these properties were given up by owners who couldn’t afford their mortgage payments anymore. In these cases, the house is often poorly maintained – after all, if the owner can’t make the payments, he or she is likely falling behind on paying for regular upkeep as well.
Maintenance and Condition
Maintenance and condition can be a problem in foreclosed properties because of the circumstances under which the previous owners moved out, and of the amount of time the house may have been unoccupied.
Problems With the Purchase
Despite all these potential problems, foreclosures can still be a good deal. If you are willing to fix problems that most people do not want to deal with, you can buy a home at a significant discount. However, you may encounter additional issues when it comes to actually purchasing the property and getting it in move-in condition.
Vandalism and Neglect
Damage is not uncommon in foreclosure properties, and it may be caused by vandals or the former owners.
Removal of Valuable Items
To get revenge against the bank and to make an extra buck, the previous homeowners might remove items that had value, including appliances, fixtures, the kitchen sink, bedroom doors, closet doors, copper pipes and more. Anything the homeowners do not take might be taken by thieves. Either way, many bank-owned properties are missing things that generally come with seller-owned properties.
Issues With Lenders
Buying a home from a lender has its issues as a result of the increased level of bureaucracy and the limited transparency afforded to those who buy foreclosures.
Lenders will not give you money for a home they consider uninhabitable or that appraises below the purchase price. If you are an investor paying cash, of course, this will not be a problem.
Time Delays With the Owner Bank
Common sense says that banks should want to unload REOs as quickly as possible, but in reality, banks sometimes drag their heels in considering offers and throughout the escrow process.