Buy a Foreclosed Home?
What do you think about buying a foreclosure for your next home or maybe as a rental property investment? If you’re in the market, have you investigated foreclosures in your area?
U.S. Foreclosure Trend
Depending on where you live, the number of foreclosed homes on the market may have dropped a bit or quite a lot over the past couple of years. Here are recent data from RealtyTrac®.
If you live in Nevada, Florida, or Ohio, you’ve still got lots of foreclosures to choose from. But you Montanans and North Dakotans might have to look hard to find a good foreclosure deal. In any case, a service like Foreclosure.com can be invaluable and a huge time saver if you want to check out foreclosures on the market.
Foreclosure Buying Cautions
About the time the real estate market had crashed quite a lot I briefly considered investing in a foreclosure in Minnesota, where I then lived. I looked at several properties and came away shocked by the condition of some. I eventually got scared off of the idea, and that turned out to be a good thing because real estate values continued to drop quite a lot more from that point.
Conditions are quite different now. Home real estate market values are mostly rising, but plenty of inventory remains and good deals may be had by those persistent enough to do the research. Before you dive in, consider these tips:
- Get pre-approved for a mortgage to boost your bargaining power.
- Choose an agent with lots of foreclosure experience. (Today finding an agent without foreclosure experience may be nearly impossible!)
- Utilities may have been turned off for some time. This raises the prospect of damage or deterioration a typical home inspection is not necessarily designed to uncover. Remember that foreclosure sales are usually “as is.” You need a real professional to assess any property before you buy.
- Homeowners are required to make disclosures about a property. But the homeowner is long gone and no one from the bank has ever lived in the home. Talk to neighbors and research building permits for the property at city hall.
- Check for liens on the property.
- Re-key all the locks and otherwise secure the property as your first order of business after closing.
Have You Bought a Foreclosure? Would You?
Have you purchased a foreclosed home? How did things turn out? Are you tempted by the potential of a great deal to consider buying a foreclosure, or are the unknowns just too scary for you?