Buying a foreclosure property can be a bittersweet experience. You may have stumbled upon a sweet deal, but there's the reality that someone had to be evicted for lack of payment from the same property. Foreclosure homes may give you the opportunity to purchase at a competitive rate, but they do come with additional legwork. For example, the title to the property may be in question, or the home may need work before you actually move in.
Here are important factors you should consider before purchasing a home that's in foreclosure.
1. Obtain as much information about the property as possible
A primary challenge with foreclosure homes is that you don't have access to as much information as you normally would. When buying from a normal seller, you will get to know about the history of the home, how the surrounding neighbourhood is, where to purchase groceries, etc. Sellers provide valuable insights that allow you to understand more about the home and its environs- and much of this information isn't available when buying a foreclosure home.
Be prepared to do much of the legwork yourself. From carrying out a home inspection to snooping through the neighbourhood, you'll have a long list of duties on your hands before closing on the transaction.
2. Make sure the title is clean
Another important factor you should consider with foreclosed homes is how clean the title actually is. The previous owner of the property may have outstanding loans and liabilities—some of which may follow you as the new property owner. You should have the title thoroughly verified by a conveyancer to avoid assuming risk from the previous owner. Purchasing title insurance is also an excellent way of covering yourself against such risks moving forward.
3. Consider how much repairs will cost
Remember that there's a reason why foreclosed homes come at a relatively lower cost. In most cases, you will be responsible for repairs, renovations, cleaning, and other work aimed at aesthetic appeal. Calculate these costs in advance so you don't get blindsided.
4. Seal the deal in a timely manner
As much as purchasing a foreclosure home requires careful planning, you don't have all the time in the world. Most mortgage lenders are looking to cut their losses when selling a foreclosed home. Therefore, any higher bid from a potential buyer will attract their attention in a heartbeat. Look to close as soon as you reasonably can so as to prevent another buyer from snatching the deal right out of your hands.
For more information about the process, contact a property conveyancing service.