With the increased number of foreclosures around the country, more and more buyers and investors are seeking out foreclosed properties or properties that are advertised as Short Sales - meaning that the bank may accept less than what the sellers owe on the property.
Foreclosures can be an opportunity to get properties at a discount. We have personally purchased two foreclosed properties ourselves and feel like we made a good investment.
However, it is important to be aware that can be risks that come with foreclosed properties such as:
- AS-IS: Most foreclosures are sold "As Is" and without a seller's property disclosure that would list any known defects in the property. There are usually specific forms that you will be required to sign to protect the bank that has taken possession of the property. Make sure you have a thorough home inspection so you know what you are buying.
- REDEMPTION PERIOD: Many states have a "Redemption Period" where a person who lost a home to a foreclosure can payoff the property and redeem it. Make sure you understand your rights and all potential risks if you buy a foreclosure.
- PRICE - just because a property is a foreclosure does not necessarily mean that it is priced at a discount below other homes on a market. Make sure you understand the current market value of the home. Your Realtor (R) can help you understand the local market.
- FORECLOSURE ALERTS - There are several services that will charge you a fee to notify you of foreclosed properties. If you are in an area with very few foreclosures, this may not be worth the investment.
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