Buying a home out of foreclosure, What to consider
Posted Sep 5, 2007 @ 8:25 am, Viewed by 772 Visitors, Read 822 Times.
Foreclosure or REO (Real Estate Owned) meaning bank or lender owned properties. These properties are mainly owned because they were foreclosed on, and the bank / lender was not able to sell them at sheriff’s sale if that is done in the state the home is located in.There are many things to consider when purchasing a house, townhouse or condo which has been foreclosed on, or is REO.
1. Property Taxes: In most states property taxes are recorded as a lien against the property and cannot be removed by any foreclosure proceeding other than a foreclosure proceeding for delinquent property taxes. Make sure that you take into account any property taxes that may be owed on the property as they will become your responsibility once you take ownership of the property.
2. Title Companies / Real Estate Attorneys: Typically the foreclosing bank will try to dictate who the title company that is to be used. In the State of New Jersey and many other states the buyer will have their own Real Estate Attorney to do the title search obtain title insurance for the buyer and generally protect the buyers interests. It is always a good idea to try to get the foreclosure bank to pay the closing costs, sometimes the bank will do that, sometimes they will not, but many times they will pay part of the closing costs so it is worth asking for.
3. Home Inspections: Prior to making any offer it is of extreme importance that you complete all inspections of the property. Inspections should include: Mold, Structural Damage & Rot, Termites & other bugs / rodents, Air Conditioning / Heating Systems, Roof Inspections, finally and least important appliances. Prior to your inspections you should make sure that electricity, Gas, & Water are turned on. The foreclosure or REO bank will be selling the House / Townhouse / Condo in AS IS WHERE IS condition, once a contract for purchase has been fully approved any and all repairs are the purchasers responsibility.
4. Calculating Repair & Upgrade Costs: Bring in qualified professionals to help you to assess what the real costs will be to bring this house / townhouse / condo back to prime condition. Many times people will look at these properties after having watched way to many HGTV shows on Flipping Real Estate, shows such as Flip This House, and The Property Ladder come to mind, and they severely under estimate what the true cost in dollars and time will be.
People who find themselves facing foreclosure usually have not been maintaining their home for a long time. At the point where they are foreclosed on they may be bitter about the whole process and take it out on the house. Their may be hidden things which would not normally go wrong with a house which are wrong in the house you are looking at so please be sure to hire a professional home inspector.
Before you even begin looking at foreclosure homes, you should consider hiring a Professional & Experienced Realtor who has worked with investment properties such as foreclosures & REO. Such a Realtor can help you greatly in deciding which foreclosure home you wish to move to the next step with and start paying for inspections on.
Best of luck.
James Boyer
Realtor Associate
488 Springfield Avenue
Summit, NJ 07901
973-376-0033 (Office)
973-647-0253 (Direct)
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Social Bookmarking3 Responses to “Buying a home out of foreclosure, What to consider”
James Boyer
If at all possible I would try to avoid it, but some banks will insist on it, so there may not be a choice.
Posted 2 years ago
Jeff
great info.
Posted 2 years ago
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James Boyer, is a resident of Morris Township in Morris County New Jersey and Specializes in listing and selling homes in Morristown, Morris Township, Madison, Florham Park, Chatham, Summit, Short Hills, Millburn, Maplewood, & South Orange New Jersey and Morris Essex & Union County Real Estate. Read More
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Great post! Very useful information. Any thoughts on looking out for being locked into Binding Arbitration, or is that not a concern in foreclosures and REO?