Foreclosure Follies: The Top 5 Mistakes You Could Make When Buying a Foreclosed Home
The economy has afforded many of today’s home buyers the opportunity to purchase foreclosed properties. While the homes can be purchased at bargain price, buyers need to be aware of some hidden traps before they make their investment. Whether you are buying a foreclosed home to live in, rent out, or flip and resell, you’ll want to be aware of the common mistakes that people make when purchasing foreclosed properties.
Misunderstanding “House Flipping”
A home foreclosure is an excellent opportunity for a buyer to get a great deal on a dwelling. However, you need to ensure that the cost it will take to repair the home doesn’t exceed what you will gain in profit. If you’re handy and can make some of the fixes on your own, you could stand to reap a substantial reward in profitability. If you intend to flip the home and sell it for profit, don’t just take the first run-down home you see. You need to be realistic about the amount of work the home needs and how much the improvements will cost. If you are honest from the beginning about how much money you can truly make off of the home, you won’t get in trouble later down the road and find yourself stuck with a money pit.
Choosing to Fly Solo
Home buyers who choose to fly solo without the assistance of a real estate professional can fall into some common pitfalls of home foreclosures. A licensed professional can offer knowledgeable advice when it comes to the price of a dwelling, location and flaws related to the home. Aside from a realtor, you should enlist the help of a home inspector. You might think that you know what to look for, but there are plenty of problems in a home that aren’t visible to the naked eye. If you choose to inspect the home yourself, you could be buying hidden dangers and damages when you buy a foreclosed home.
Legal Representation
Purchasing a foreclosed property can be a challenging prospect, and you need to a thorough understanding of the legalities behind the purchase. A real estate attorney will be able to determine if there are any taxes, liens or other financial dilemmas that could transfer over to the buyer. An attorney will likely have more knowledge about these issues than just a regular real estate agent, so make sure you have someone who is professional and qualified. Don’t try to tackle these tricky issues on your own, or you could be signing contracts or documentation that land you in a sticky situation later down the road.
Hidden Damages Not Clearly Visible
Mold, mildew, foundation problems, termites and flood damage are just a few of the many underlying issues of a foreclosed home. While the dwelling may look habitable and in move-in condition, your home could have some serious flaws that remain undetected to an untrained eye. According to the professionals of Pest Detective who specialize in pest control in Vancouver BC, foregoing the home inspection process could be one of the biggest mistakes a home owner could make when purchasing a foreclosed property. A licensed and certified home inspector can determine the structural soundness of a property and any hidden flaws.
Short-Term Thinking
Most home buyers make the mistake of thinking that a foreclosed property will be a quick monetary fix. However, a home may have been sitting on the market awhile, and it can take a great deal of TLC and hard work to get the dwelling back into livable condition. It can also take a substantial amount of time for the neighborhood to come up in value again. Consider this time frame before you buy—if you’re in a hurry to turn the home around and re-sell, this might not be an option. If you are content with owning the home for a while, and possibly putting a lot of work and money into it, then proceed with caution and compare the time frame with your financial goals and capabilities.
The United States has seen a significant increase in foreclosures since the start of the housing bust. While one person’s hardship can be another’s financial gain, you need to put forth a bit of effort and research before you think about purchasing a foreclosed property. Some think that foreclosed properties are a great way to make money, and while this is often true, you’ll end up losing money if you don’t choose carefully.
Category: Real Estate
