04 Feb How to Safely Buy a Foreclosed Property
When the real estate market is in flux, buying a foreclosed home can be one of the best deals around. And while now is a great time to buy a home, especially for first-time buyers, HouseMaster, a North American home inspection franchise, is encouraging homebuyers to remain cautious of the many issues that lurk below the surface.
According to HouseMaster, not all foreclosures are a great buy and if consumers are not fully educated on the property or the process, a buyer could potentially make a poor investment decision.
“Properties in different stages of foreclosure represent opportunity but also danger for the unwary buyer,” said Kathleen Kuhn, president of HouseMaster. “While potentially lower asking prices draw possible buyers to these homes, each property has its own challenges that can come from abuse, neglect or deferred maintenance from the previous owner. Consumers must do their homework to help them know whether a property is truly a ‘good deal.'”
Prospective investors should be familiar with three main types of foreclosure properties and their respective structural and physical attributes. They are:
Short sales — A home sold shortly before foreclosure proceedings, a short sale closing can take months to materialize during which upkeep of the property may be neglected.
Real Estate Owned (REO) — A foreclosed home is now owned by a bank. These homes are prone to issues not prevalent in other resale homes, generally due to lack of use and vacancy. Often sold “as is,” a professional home inspection report that lists defects can leverage a lower price from the bank.
Auctions — One of the riskiest ways to purchase a home, auctioned properties are sold “as is” and auctioneers offer little time for either personal or professional inspection. Access to the attic and crawlspace, among other areas, is often restricted.
“Education is key when buying a foreclosed property,” added Kuhn. “It helps the buyer understand their options allowing them to ensure their dream doesn’t become a financial nightmare.”
According to a recent study conducted by HouseMaster, there are five main physical conditions that are often found in a foreclosed property. They are:
- – Moisture-related problems
- – Defective gaskets, valves and hoses that are leaking or have the potential to cause destruction
- – Vandalism, especially if the property has been vacant
- – Insect and rodent infestations
- – Blocked or damaged waste and sewer lines
“Now is a great time to buy a home, especially for first-time buyers,” added Kuhn. “But, if buyers are considering properties in various stages of foreclosure, the necessary inspections are very critical in making a good investment and getting the best deal.”
For more information, visit www.housemaster.com.
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