The Pitfalls of Buying Foreclosures

Buying a foreclosed home can often save someone 30% off market value of a property.  However, most foreclosures are purchased without ever gaining access to the inside of the home and it’s highly possible to end up with more work than you bargained for. Here are just a few examples of the problems you may encounter:

1. Mass Destruction

Owners forced out of their homes can sometimes seek some revenge in the form of destruction to the property that they are leaving behind.  It’s been reported that some will flood the home, remove appliances and light fixtures, or other destructive acts.  Unfortunately, this leaves you to pay for many unexpected repairs in the home.

2. Owner Occupied

Even after you have been handed the keys at settlement, it’s quite possible the previous owner has refused to move out and still resides in what is now your new home.  This situation requires a county sheriff and visits to the court house to have the previous owner evicted from the property; a process that can take over 90 days.

3. Non-Owner Occupied

If you purchased the home at an auction and discover the previous owner used it as a rental property, you are now stuck in a similar situation as the owner occupied property.  The law is on the side of the tenant and they may be able to stay in the property for 90 days, or even the term of the lease. 

4. AS-IS

When a property is termed AS-IS, the lender is allowed to sell the home in the current state of condition, whether it’s livable or not.  All foreclosures are sold in an AS-IS condition.  If you want an item to be fixed, repaired or replaced, be prepared to replace the item with your own money.  It would be ideal to have a contractor or home inspectors view the outside of the home with you prior to buying.  Additionally, don’t be afraid to knock on the door and see if you will be allowed to view the inside.  The current owner may let you in to the property, but don’t be shocked if they aren’t willing to cooperate as this might be a difficult time for them.

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