Recent reality TV shows focused on real estate have glamorized the process of buying foreclosure properties and a lot of people are wondering about the pros and cons of buying foreclosure properties.
The biggest advantage to buying foreclosure properties and the reason most people get involved is that these properties are typically sold below market value. Foreclosure properties come with headaches not only in the repairs needed but sometimes in the chain of title. The reason foreclosure properties can be bought at a discount is because the buyer will more than likely have some headaches to deal with.
People earn their reward for buying a foreclosure property when they sell the home. Selling a foreclosure home is typically pay day and is the day when all of the hard work pays off! It can be a daunting task to buy a foreclosure property, deal with cleaning up title, then handle the home remodel, but selling the home is when all of the reward pays off!
The disadvantage to buying a foreclosure property can be in the repairs. If a person is not experienced in construction and does not know people in the construction Industry, the repairs and remodel of a foreclosure home may outweigh the benefits. Construction is not for the faint of heart and it’s important to understand that an inexperienced person will probably pay top retail cost for any contractors they hire.
Additionally, cleaning up the title is often necessary as Homeowners Association debt or foreclosure paperwork filed incorrectly can also become overwhelming. And inexperienced homebuyer may end up paying too much money to hire attorneys who clear up title on the property. Knowledge is power and buyer should be careful which attorneys they turn to with help on these foreclosure properties.
Invaluable tip, and many of us learned this lesson the hard way, is to make the decision never to live in a foreclosure property while you are remodeling it. A home remodel can quickly become an overwhelming experience and a person needs a clean home to go to and relax after a hard day. Trying to live in the home while remodeling becomes overwhelming and a person can never “get away’ from the project. So it is important to hold out moving into the home until the remodel is complete.
Buyers also need to beware that in a normal real estate sale, the seller will fill out a Seller Disclosure Addendum which itemizes everything the seller knows about the house and this information is given to the buyer. However, when you buy a foreclosure property, there are no Seller Disclosures and these sales are truly “buyer beware”. The lesson here is to make sure you know what you are buying before bidding on foreclosure properties!
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