Foreclosed Homes: Deals Or Disasters?
Posted on: 4 December 2019
Single family homes are expensive – there are no two ways about it. You may need to set aside a large portion of your monthly income just to pay for your housing expenses. That can mean that scoring a home in the desired neighborhood or at the size you need can be a challenge if you want to stay within your budget. That's where bargains like foreclosed homes come in. These homes can be great deals, but they can also come fully-loaded with problems. Before you spend time looking at this particular category of the real estate marketplace, find out what to keep in mind as you shop.
It's Owned by the Lender
Foreclosed homes have short shelf-lives. Lenders do not want to be in the real estate business, so they tend to price foreclosed homes far lower than other comparable sized homes. One thing is certain, you need to have your lending lined up because you will be in competition with other buyers for the home, and the best homes go fast.
It's Likely a Fixer-upper
When a homeowner is unable to meet their mortgage obligation, they are probably not in a good position to take care of the home either. Also, the former homeowners can be understandably upset when they are forced to vacate the home. Unfortunately for you, that can mean the homes are in dire need of some TLC and are often stripped of important appliances and more. Leaking roofs, stopped-up plumbing, and broken windows are all examples of problems that may be on the to-do list when all is said and done. Be sure to have the home inspected and to get some repair estimates before you make an offer.
Issues With Lending
While conventional lenders are not that concerned with the home's condition, some government loan sponsors are. If you plan to use loan products from the Veteran's Administration (VA), the Federal Home Administration (FHA), the United States Department of Agriculture (USDA), and others, expect some additional steps. These loan guarantee products may require the home to have flooring and certain appliances and to meet other standards. In some cases, special lending is available to cover the needed upgrades.
Buyer Beware
Foreclosed homes may not come with the traditional disclosures usually used to help buyers understand the history of the home. For example, you may not be told about deaths on the property, previous major flooding issues, and more. You can, however, do your own investigations by speaking to your real estate agent.
If you are interested in finding out more about this affordable way to become a homeowner, speak to a real estate agent and let them guide you towards your dream home.
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