If You Are Tempted by a Cheap Foreclosure, You Will Hate Yourself Later

It is very tempting in these days to attempt to buy a foreclosed home. In a recent article in the New York Times Business Section on October 16, 2010 five factors were identified that should get everyone a pause forCheap Foreclosures thought before pursuing a foreclosed property:

  • Loans
  • The bank will prefer to sell the property for less money to an investor or a buyer who can pay all cash rather than making a loan. That is particularly true if the house needs a lot of work because fixtures like toilets, sinks, and kitchen appliances have been removed. Banks simply aren’t going to give a loan for that kind of damage.

  • Foreclosure Auctions
  • A foreclosure auction can be a hidden pit of problems. You make one after the fact, that they are making claims against the property that you wish to buy, but you can end up purchasing property only to find out that there are other mortgages or liens on the property.

  • Inspection
  • It is crucial that if you are going buy a foreclosed home, that you insist that it be contingent on a home inspection that is performed after the power and water have been turned back on. It is not uncommon for owners or vandals to strip houses of copper pipes and wires.

  • Title Insurance
  • If a former owner wins back the rights to the foreclosed home and tries to kick you out, your recourse would be to make a claim on your title insurance. However, it can be hard to get title insurance these days on a foreclosed property.

  • The waiting game.
  • It is important that you thoroughly investigate the condition of the house, make sure that there aren’t any liens, have a complete inspection and have title insurance before you make an offer on a foreclosed property. There is no rush to buy and it is important that you avoid the temptation to spend your life savings on an investment that could lead you down the road to bankruptcy.

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