A few weeks ago, we told you about some advantages to buying a foreclosed property. While there are many advantages to it, buying a foreclosure is not always the best way to own a home. Buying a foreclosure has many disadvantages that you may not have considered. If you want to take advantage of today's mortgage rates by buying a foreclosed home, consider these disadvantages before making your final decision.
The Procedure
When you are buying a foreclosed property, it is not like making a traditional home purchase. In fact, there are several hoops you have to jump through in order to get a foreclosed home. Most foreclosed homes are sold to home buyers "as is." This means that you buy the home and if something is wrong with it, it is your responsibility. There is no warranty to cover it. If you are not careful, this could end up costing your tens of thousands of dollars to bring the house up to code or even livable conditions.
Liens and Liabilities
Purchasing a foreclosed property often means that you will need to pay any liens or back taxes on the home before you can take ownership. If you are getting the home for a reduced price, paying these fees may still make the home a great deal. However, be aware of these hidden charges before getting too excited about a foreclosed home's price. There could be a chance that you would have to pay more than just the price of the home.
Purchasing a Foreclosed Home at an Auction
There are many auctions that sell foreclosed properties to the highest bidder. You can participate in these auctions and get great deals on foreclosed homes. However, you must be able to have 10 percent for a down payment when you bid on the home and you must also be prepared to show your proof of financing before you will be allowed to sign the dotted line. If you are not prepared for these stipulations, you could bid on the home of your dreams and then have to say goodbye to it.
Returning Owners
It does not happen very often, but there are times when a previous owner may return to the foreclosed home after you have moved in and try to claim their right to the property. In some cases, you may even have a hard time getting them to move out when you purchase the home. There are remedies for these situations, but it can be frustrating and nerve-wracking.
Foreclosed homes are a good way to get a quality home at a bargain price. However, you must know what you are getting into when you purchase a foreclosed home. Consider these four disadvantages and buying a foreclosed home may work out perfectly for you.