Written by David S. Lewis, broker for Infinity RRE, LLC, Plano, TX
Are you a first time home buyer looking to get into a home at a great price or someone looking for some investment properties? As you have started your research on what type of home to buy you may have started looking into foreclosed homes. While the prices on these homes might seem great, knowing the realities of what you may be getting yourself into is important.
What is a Foreclosed Home?
A home is foreclosed on when the borrower in unable to pay the lender and the lender repossesses the home. The property is then put on auction at a price below market value and sold “as-is” often with out an inspection available prior to the purchase.
Conditions of Foreclosed Homes
In purchasing the home you may get very lucky and the property will be in great shape. However this isn’t usually the case. Quite often the home is going to require repair work from small things like replacing doorknobs to huge like repairing the foundation. These repairs can eat away at the savings you got from the price of the house being low. You will also most likely have to purchase appliances and fixtures as these are often sold. Sometimes the homeowners destroy walls or cut wires out of anger over losing their home. That $150,000 home that was a steal may end up costing you $170,000 or more after the repairs are done.
Another problem you may face with your foreclosed home is the potential that people may still be living in the home. They may be tenants or family of the original owners and as the successful purchaser it is typically up to you to evict them. This could require you to spend money on a lawyer or to pay the people to leave and the process can take a while especially if you want it to go well. Tenants that get angry could destroy the property too.
To Buy or Not to Buy
Even with all the risk associated with foreclosed home there are still some good deals out there for those who are patient and willing to do the research. This is not always the best way to go though if you are a first time homebuyer or are looking to move into a property quick. Remember to not get tunnel vision when looking for a home… you may be able to find something for a great price with out having to deal with the headache of a foreclosure.