Pros and Cons of Buying Foreclosures

Foreclosures are extremely common and they are potentially a great deal for buyers. However, you need to consider the pros and cons of buying a foreclosed home.

The Columbus Realty Team has experience buying and representing buyers of foreclosed properties. Make sure you choose an agent with experience!

The biggest “pros” to buying a foreclosed home are low price and profitability. Typically you can get a great deal on a foreclosure because the titleholder must release inventory. Foreclosed homes are usually priced lower than other listings in the area to make sure they sell quickly. However, most disasters in this field occur due to over-bidding on properties without properly assessing the true market value and fix-up costs. Research can make or break the fortune one could make on a foreclosed property.

Another “pro” to buying a foreclosure is that buyers have time for inspections and to make sure the title is free and clear. This is not the case when buying a sheriff’s sale where the property cannot be viewed prior to ownership. It is advised that buyers of foreclosed homes use a reputable title company to search for outstanding liens and judgments.
Finally, there are no issues concerning current tenants and move-out dates. Foreclosed properties are vacant and empty of belongings.
The biggest “con” associated with foreclosures is the negligence of the seller. As all foreclosures are sold in “as-is” condition, a buyer must take all repair costs into account when placing a bid on a foreclosure. Keep in mind that some sellers probably couldn’t afford the typical upkeep costs necessary to home maintenance if they could not afford monthly payments. Therefore, foreclosures might be in disrepair. Always estimate repairs on the high side due to latent material defects. The buyer may make sure he has the money available to make such repairs or use a 203K loan (*See http://www.fhainfo.com/fha203k-streamline.htm for more information on 203K guidelines and information).

Lastly, some banks can be difficult to reach or negotiate with. Since HUD home bidding is online, it’s a quick and easy process.
All of the pros and cons should be considered when bidding or writing an offer on a foreclosed home. Make sure you use a HUD Registered Agent who is an expert in foreclosures! Call the Columbus Realty Team today to begin your search and start your journey!