Protecting Yourself When Buying A Foreclosure Property
One of the benefits of buying foreclosure property is that such properties typically go for reasonable prices. However, foreclosure properties have hidden dangers that you should protect yourself from. Here are the protective measures you need to take:
Use a Real Estate Attorney
A real estate lawyer can help you any time you have a real estate transaction to execute, whether you are buying or selling a house. The input of a lawyer becomes even more valuable, however, if you are buying a foreclosure property. This is because foreclosure laws vary by state, and they can be very complex in some state. A real estate lawyer will scrutinize the process and all the necessary documents to safeguard your investment. Your real estate agent has probably worked with a few lawyers in the past, so they can hook you up to a reliable one.
Have the Property Inspected
Property inspection is an integral part of the real estate purchase process; you should never ignore it. Even if you were inclined to skip the process, however, you shouldn't do it if the home for sale is a foreclosure. This is because foreclosure properties aren't always properly maintained. A homeowner who is struggling to pay their mortgage probably doesn't have money to spare for maintenance. Some people also stop caring for their homes when they know they are headed for foreclosure.
Don't Ignore the Long-Term Implications
Because foreclosed homes aren't usually properly maintained, they don't attract high resale values. This is especially important if you are buying the foreclosure property as an investment property and not somewhere you want to live. You may end up making too many repairs and eroding your potential profit margin.
Work With a Realtor
Lastly, a foreclosure home is not a property you want to buy without a real estate agent's input, although you can do it. There may be additional paperwork or hoops to jump through— things that aren't usually tackled in conventional home purchases. In fact, you should specifically ask for a realtor who has dealt with foreclosed properties in the past. A major cause of complication for this type of transaction is the fact that you are dealing with multiple parties, such as the primary lender, the current homeowner, and the (possible) other parties who hold liens on the property.
Foreclosure properties are typically sold as-is, and this means there may be a few defects to fix after buying the property. Always have the cost of the necessary repairs in the back of your mind during the negotiations.