Pro’s and Con’s of purchasing a foreclosure home from the bank.
If you are in the market for a home, chances are most houses on the market are foreclosures. The Lawhead Team would like to share some pros and cons involved with buy a foreclosure property.
Pro’s of buying a foreclosure property:
- Buy below value – While the deals aren’t as good as they were in the past, you may still be able to purchase a foreclosed home for three quarters of what a home is worth.
- Faster process – If you find a home in the pre-foreclosure stage, there will be a sense of urgency from the seller to avoid the stigma of a formal foreclosure. You may request inspections on the property prior to making a final decision along with research the title to make sure it is clear of liens.
- You are allowed to inspect a foreclosure before buying it – You will know exactly what you are getting and will be given a predetermined contingency period in which to make your final decisions.
- You may use regular mortgage financing – Even though the process of buying a foreclosure is different from purchasing a regular home, you can still take out a mortgage loan to pay for the property.
- Quicker sale and negotiating powers – The bank will be motivated to get the property sold and may negotiate price, down payment, closing costs, etc.
Con’s of buying a foreclosure property:
- Maintenance issues – Homeowners who know months in advance they are losing their property may be less likely to take care of it and may not have the funds to make necessary repairs. In extreme cases, homeowners may feel bitter about their bad investment and may purposefully damage the property they’ll be vacating.
- Unforeseen repairs – While you may be able to buy a foreclosure home below its market value, that doesn’t mean you may be getting the best deal when you consider major repairs that may need to be done.
- No warranty available with a foreclosure – A foreclosure is sold as is with no cause for recourse if the home has defects. If the home has been lived in already you may be more likely to have issues that won’t be discovered until you’ve moved in.
- You may incur the previous owners cost of neglect – When purchasing a foreclosure, keep in mind the previous owner couldn’t afford to keep it. In this case, it is possible a lien may have been placed against the home which becomes your responsibility once you’ve purchased it. Do a title search before committing to buying a foreclosure to uncover any liens.
Do you have questions about purchasing a home in the North San Diego County area? Contact The Lawhead Team for all your buying and selling needs.