Buying Houses in Foreclosure

Buying a house in foreclosure can be the deal of a lifetime or a risky proposition. Potential home buyers are attracted by homes advertised as foreclosures available at rock-bottom prices. These 'would-be-homebuyers' hope to win the lowest bid and purchase a home, sometimes having never seen or inspected the home. This is really no place for an inexperienced foreclosure buyer. Hiring a real estate agent for guidance and assistance may be a smart move.

Where to Find Houses in Foreclosure

As real estate agents, we have access to a detailed list of foreclosures in the area and have a handle on the condition of the property and any potential problems. Check with major banks and lenders who maintain a website of bank-owned properties. Local asset management companies handle a lot of foreclosures and have helpful information. HUD, Fannie Mae, Department of the Treasury, and the Small Business Association all have helpful websites.

Consider Carefully

As with most things which seem too good to be true, there are pros and cons in buying a foreclosed property. The upside is there are some really great bargains out there. But not every foreclosed house is a great bargain. Some houses are diamonds in the rough and just need a bit of attention, while others may appear as a real bargain on the surface, but may be hiding unforeseen problems. Without an inspection, it's hard to tell what these problems might be.

Legal Considerations

Is someone still living on the property? Be aware that sometimes there are people actually still living in a foreclosed property. These folks can be the previous owners, relatives or friends of the previous owners, or even squatters. If this is the case, then eviction may be the only remedy. Sometimes evicted tenants may even retaliate, so it's probably best to get the help of an attorney and have him handle this.

Condition of Foreclosed Houses

Most foreclosed homes are sold "as is" so there is absolutely no guarantee of the condition of the property. Because the occupants may still be living in the house, an inspection may not be possible. When folks realize their home has been foreclosed, they could let the property fall into disrepair, sell the appliances for cash, smash out walls and fixtures, or even destroy the house.

Buying Houses in Foreclosure Can be Difficult

Buying a foreclosed property is not recommended for first time home buyers. There are a lot of seminars and so-called gurus out there who want folks to believe buying houses in foreclosure is easy. In reality, the process has many pitfalls and potential problems, especially for those new to the process. Great deals and a lot of money can be made from buying houses in foreclosure, but there may also be potential problems. It helps to know the territory before going in and get the right people to help.

If you have questions about buying a foreclosed property that we haven't covered here, please use the 'comment' link below to ask your questions.