Q and A About Foreclosed Properties
A foreclosure can be a great way to get a deal on a property. While the financial reward may be significant, it is important to remember that there may also be a considerable amount of work. When purchasing a foreclosed property, make sure you are 100% sure about the investment.
Want to learn more about what a foreclosure property entails? Take a look at our Q and A to get a better feel for what and how to deal with the process.
Q: What is a foreclosure property?
A: A foreclosure home is when a lender (or lienholder) takes a property from a homeowner to satisfy a debt. The lender can/will take ownership of the property and sell the home to pay off the debt.
Q: Are there any problems with a foreclosure home?
A: Oftentimes, a foreclosure occurs when the property owner can no longer afford their mortgage payments. Due to the circumstances, the home may be poorly maintained due to the lack of funds. Some owners may have been forced to foreclose on their home by the bank, which means emotions are running high, and poor choices are made when vacating the home. Some (not all) people who find themselves in a foreclosure situation take their frustrations out on the home by destroying the property or removing appliances and fixtures that may be expensive. This means some foreclosure homes may be in shambles when the owners leave, and the bank takes over responsibility. Most foreclosure properties are sold “as-is,” so what you see is what you get.
Q: Are there any problems that may occur during the purchasing of the property?
A: Buying a home from a lender can be a lengthy and tedious process. Due to the abundance of red tape and increased levels of bureaucracy, banks tend to drag their feet when it comes to foreclosed properties. Also, lenders are rather reluctant to finance a foreclosed home because the home may be uninhabitable or appraise considerably lower than the asking price. Just remember to be patient when purchasing a foreclosure because the process will not take the usual 30-45 days closing period and can last up to several weeks.
Q: Will I know the condition of the home before I purchase?
A: Most lenders allow the potential buyer to enter the home to get a feel for what work needs to be completed. However, a foreclosure home will not have a seller disclosure document to inform you of any preexisting problems with the property. It is best practice to bring a trusted inspector along for the initial walkthrough of the property. With a knowledgeable eye, you will be able to get a sense of what work needs to be done to get the home habitable.
Q: Is a foreclosed property worth it?
A: Foreclosure can be a great investment for either a personal home or rental property. However, it is important to not overlook the time, energy, and money needed to get the property up to par. When purchasing a foreclosure, make sure it is 1) a good investment and 2) worth your time and money.
Want to read more about foreclosures? Take a look at the following blog
At Oak City Properties, we have been helping those in the Raleigh area purchase homes for years! Whether you are a landlord looking for new rental opportunities or a family trying to find your “forever” home, our full-service property management company is here to help.
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