Is It Safe To Buy a Home In Foreclosure?
You’ve been keeping your eye on a certain neighborhood in your area. It’s filled with the kind of homes that you’ve dreamed of owning. One day as you are driving past, you see that someone is selling a home is in foreclosure. You think to yourself,
Now is the time to buy that home…
Of course, your next question to yourself is, “Is buying a home in foreclosure a good idea?’
Today, we’re going to explore the pros and cons of buying a home in foreclosure.
The Advantages of Buying a Home In Foreclosure
There are plenty of advantages to buying a home in foreclosure. If you can nab a home for a great price, you’ve just procured instantaneous equity.
You Can Save a TON Of Money
Many homes in foreclosure sell for far less than they are truly worth. Buyers can easily save up to 15% or more when buying a foreclosed home.
In essence, buying a foreclosed home might provide you with the opportunity to move into a neighborhood that you may not have been able to afford otherwise. However, not all foreclosed homes provide these kinds of savings.
Easier to Negotiate
Short sales and REO properties provide buyers with a bit more negotiation leeway. These instances allow for appraisals and home inspections to get to know the property better before you buy it. it is also possible to get a mortgage for an REO property.
If you can buy a home for far less than it is worth, then you’ll be able to get a huge return on investment. We recommend purchasing short sale or REO properties, as houses purchased at foreclosure auctions are a bit of a gamble. You never really know what you are going to get.
The Disadvantages of Buying a Home In Foreclosure
There are a few noteworthy disadvantages to buying a house in foreclosure. Here are the biggest ones.
The Property Comes As-Is
You cannot inspect a foreclosed property prior to buying it. When you purchase the home, you are purchasing it as-is. This purchase could come with potential damages that you don’t want to deal with.
Repairs Could Cost a Pretty Penny
Buying into the unknown means you might have to spend a fair amount of money to make the home livable. The likelihood of having to deal with undisclosed repairs are pretty high when buying a foreclosed home. At the end of the day, it comes down to how old the home is for the most part.
Typically, people end up having to deal with structural or plumbing issues.
When you buy a foreclosed home, you buy the home as-is along with the title. If the title has liens placed on it, such as divorce decrees or contractor liens, you might be in trouble.
Homes that are unoccupied for quite some time often open themselves up to unwelcome critters, including insects, mice, and in the worst case, humans. Many buyers come across squatters, runaways, or drug addicts. Always be careful when you enter your recently purchased foreclosed home for the first time.
Buying a home is a serious deal. Don’t rush the process all because of a good price. Take caution and talk to an experienced real estate agent to help you through the process so that you can avoid hassle and debt down the line.