What to Consider When Buying a Foreclosed Home

If you're a first time homebuyer looking for that perfect home, you may be tempted to invest in a foreclosed home. While this option may be cheaper, there are a few things you should consider first.

Buying a Foreclosed Home

Buying a foreclosed home isn't a bad option, you just have to understand that it's different than buying a regular home off the market. While this may be a more affordable option, there are other things beyond the sticker price to consider before deciding a foreclosed home is the way to go. Before you decide to invest in a foreclosure, consider the following information.

Is It a Bargain?

One of the main reasons homebuyers decide to invest in a foreclosed home is because of the price tag. While the price may be significantly lower than that of non-foreclosed homes, keep in mind that there might be more things to pay for going forward. Basically, your bargain will come at a price. Think about it like this: if the home was foreclosed, this means the owner couldn't keep up with payments. If they were unable to make their payments, they probably weren't keeping up with maintenance or repairs either. With this in mind, don't just look at the price of the home, but also really consider the condition of the home. Depending on its condition, you may find that you'll end up paying just as much as you would if you were to invest in a non-foreclosed home.

Will Repairs Be Needed?

To answer this question simply, yes, repairs will be needed. With foreclosed homes, there's often no getting around this. Most foreclosed homes are very much in need of repairs, whether minor or major. The takeaway from this point is to not underestimate the price of these repairs. Some fixes can be easy and cost effective, especially cosmetic fixes like painting a bedroom or doing some cleaning. Other repairs, however, can cost quite a bit. Invisible repairs are often the most dire and the most expensive to take care of. If the house needs serious foundation work or a roof replacement, this can cost quite a bit. If the home has been vacant for some time, this can lead to another set of issues, including pest infestations, mold growth, and plumbing troubles. Once you know what repairs are needed, have a contractor give you estimates for the work needed so you can get a better idea of what you will be spending. Before closing on a foreclosed home, be absolutely sure you have title insurance in Fort Myers to protect your investment. If you're not sure why you would need title insurance, Schutt Law is happy to help you understand! Give their title experts a call at (239) 540-7007 to learn more.

Can You Negotiate?

When buying a foreclosed home, there really isn't any room for negotiations. While you can use the results of the home inspection to negotiate a lower price when buying a non-foreclosed home, this isn't applicable when buying a foreclosed home. These homes are basically sold as-is, so you don't get much of a say in anything. The home inspection and report are basically a heads up that informs you what you will need to take care of before the home is back to its best. Because of this, the home inspection is crucial as is getting estimates for the repairs needed.

Should You Buy at an Auction?

If you decide buying a foreclosed home is your best option, you will likely come across two options for buying. The first one is purchasing it at a home auction. You may get a home for an even lower price this way, but it comes with more work. To start, you most likely won't be allowed to tour the home or get a home inspection before deciding to bid on it. This leaves you in danger of making a purchase that will end up costing you more than a non-foreclosed home. You will also most likely have to pay cash for the home and if the previous homeowner is still living there, you will have to evict them. Your other option is to purchase an REO home, or a real estate owned home. This basically means the home was foreclosed on and the bank swooped in and owns the property. This is a better option because you will be able to get a home inspection, you won't have to evict anyone, and the bank will take care of legal issues like liens or clouds in the title.

Get Title Insurance in Fort Myers

Before finalizing your home purchase, be sure you're protected by title insurace. If you're not quite sure what the importance of this is, call Schutt Law at (239) 540-7007 to learn all about it!