What is the catch with buying a Foreclosed home?
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I look аt thе listings аnd ѕοmе οf thе prices seem tοο gοοd tο bе trυе.
Thеrе hаѕ tο bе ѕοmе sort οf catch οr еlѕе I wουld assume people lіkе investors wουld јυѕt swap thеѕе up rіght away tο resell thеm.
I аm nοt buying аnу lists, thеу hаνе ѕοmе online
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Most foreclosed homes are sold as is and the buyer must live in the house for something like the first year.
Outstanding liens, taxes, association bills, as is condition, failure to transfer clear title, right of owner’s redemption, title issues…..
The flooring has been ripped out, cabinets GONE, plumbing gone, lighting gone, walls destroyed and on and on people do not blame their own irresponsibility so they take revenge on the property.
As stated usually home owners who are being foreclosed upon will fail to properly maintain the home or even try to damage the home, then once the bank owns the home, the bank is not set up to be a landlord as such, the property falls further in disarray,
So the property is sold as is, the bank has no personal knowledge of any major defects that maybe found upon inspection or latter on once you move in, so they are not liable,
Therefore in making any offer on a bank owned home, an inspection is key to you offer, but there are really good deals out there since the lender once they have the property on the books once to get it off ASAP, to the point will take less on the sale once owned then they may have on a short sale when the home owner still had titled, just take some leg work
The “listings” you are looking at – that’s the catch.
If you are buying lists, realize something – the company selling the lists makes money off SELLING LISTS. They have no interest in, nor do they assist you in actually buying a HOUSE.
I assume you are looking at listings of houses going to auction. That happens because someone (lender, taxing authority, home owners association) is owed some money. Let’s say the home owners association is owed $1,200 on a house worth $100,000. So they go to the auction and ask “Who will give me $1,200 for MY RIGHTS to this house?” You give them the $1,200 and now you own their rights to foreclose – that means the house can be yours if several requirements are met – the current owner won’t or can’t pay you the $1,200 (plus about 30% – and they have a year to do so), AND you pay off the mortgage and any other liens that are on the property.
If you get a kick out of looking at lists, keep buying them.
If you want to buy a house, contact a Realtor.
Foreclosed homes can be a good investment/great value for the $$- not always stripped down/vandalized, but even if they are, they can be a good investment w/a good inspection & comparable market analysis. Foreclosed homes in good condition go fast/even over list price if they are priced competitively. Just be sure to have a complete inspection & good title officer. Inspectors check structural/major component, like ac/heat/plumbing/electric, condition. Ensure your purchase contract has seller pay all liens/past due taxes/HOA at closing. Title officer will check on liens and ensure these along w/taxes/hoa/etc are paid out of seller’s bottom line at closing (done if per original contract instruction to be paid by seller). Review the bank addenda carefully (some note extra costs to the buyer that aren’t “typically” paid by a buyer …like paying seller’s title costs, normally a seller’s expense).
The “catch”:
The owner (bank/financial institution) will not be able to provide you a copy of the Seller’s Property Disclosures(SPDS) report or Insurance CLUE report. Typically you will have to waive your rights on receiving these items in the contract or a follow-up addendum. SPDS discloses/outlines history of repairs, items still an issue/needing repair. A CLUE is a report from the insurance carrier giving a history of claims/repairs. Normally after submitting an offer and agreeing on terms, you would receive these items from the owner & you have the chance to review these and decide to move on,cancel contract, or request repair, within the agreed upon review time frame.