Many people are interested in buying a foreclosed home because they typically sell for cheaper prices than comparable homes in the area that have not been foreclosed upon. However, many people aren’t aware of all of the risks involved in purchasing a foreclosure. The risks are minimal if you do your research though. From CNN, here are some tips for buying a foreclosed home.
First, it is important to know what a reasonable price for a foreclosed home is. This means, you should know the prices of comparable homes in the area that have sold. The bigger the gap in price is between a foreclosed home and a non foreclosed home, the more work a home needs (generally). Don’t be fooled into thinking you’re getting a great deal on a move-in ready home; you need to account for the fact that buying a foreclosure almost always requires that you put time, money, and effort into making it ready for living in. Moreover, you need to make sure that you are prepared to take on the project of repairing a home.
With that in mind, you should get a home inspection, if at all possible, or at least inspect the home yourself. This is the best way for you to get an estimate of what repairing and updating the home will cost you. A home inspector can tell you if there are any out of date or non-working systems (electrical, heating, cooling, etc.) and what needs to be done to ensure your safety and comfort. This will allow you to assess how much money, time, and effort will have to go into the home. From here, you can determine whether or not you can afford to purchase the home.
Also, be sure to look into the neighborhood and surrounding homes and areas. If there are numerous other homes in the area that have been foreclosed upon, it’s probably not a good idea to buy the home. This is because areas with a high number of foreclosures (regardless of the reason for it) have lower property values than areas with a negligible number of foreclosures.
Do not buy a foreclosure in order to turn a quick profit. You should only buy a home if you are financially able, in need of a place to live, are happy with the area, etc. That is, you should plan to have to do at least a little work on a home that’s been foreclosed upon before even being able to live comfortably in it, let alone sell it for a profit. You can most certainly buy a foreclosure in the hopes of fixing it up and selling it for a profit, but it will most likely not be a quick process.
For more tips on buying a foreclosure, check out this article.