Things to Keep in Mind When Buying a Foreclosed Home

By: Helison Aniyi

Things to Keep in Mind When Buying a Foreclosed Home

Tags: Things to Keep in Mind When Buying a Foreclosed Home

Before we start discussing things to keep in mind when buying a foreclosed home, let us first talk about what a foreclosed home is. Namely, regardless of the reason, foreclosed homes are seized from the owners and put for up sale by a lender. There are many reasons a home could be seized, but foreclosed homes usually come with a lower asking price, making them an attractive proposition for homebuyers on a budget.

Currently, around 2 million homes in the US are in some stage of foreclosure. This means that now is the time to find a foreclosed home and get a good deal on it. However, it would be best if you also were extra careful as foreclosed homes are usually in bad shape. Sometimes they are neglected, sometimes they are outdated, and sometimes they are damaged to the point of no return. So, as you can see, buying a foreclosed home can be a major hit and miss.

However, buying a foreclosed home can also be a fantastic investment - a thing that will save you a ton of time, energy, and money! However, to ensure you are getting a good deal, you must know what you are doing. Thankfully, we are here to help you learn how to separate good investment properties from endless money-pits. So, if you want to know what to keep in mind when buying a foreclosed home, keep on reading.

Have the Home Thoroughly Inspected

Just as previously mentioned, foreclosed homes are usually out of shape. Thus, before considering buying a foreclosed home, have it thoroughly inspected. But, don't do this all by yourself, especially if you haven't done this before. Instead, hire a professional home inspector. If you attempt to perform the inspection yourself, you could miss some critical detail. This oversight can lead you to buy a home that needs significant repairs, which could end up costing you a fortune.

A professional home inspector is the only one who can adequately inspect a potential home before buying. He (or she) will check the entire property, including the yard, interior, and exterior of the whole house or apartment. Yes, this service does come with a hefty price tag, but, trust us, this service can save you from buying a money pit that will consume all your budget later on. Home inspectors can also advise you on the proper maintenance of your new home.

A home inspector talking over the phone.
Caption: Always rely on professional help when buying a home.

Check the Home's History

In most cases, before somebody sells a home, they are required to fill out the so-called Seller's Property Disclosure Statement or the SPDS. This statement shows the home's history - it provides the buyer with all the necessary information regarding any maintenance issues, additions, repairs, or anything the previous owner has done. When it comes time to sell your home, future buyers might also request a statement on the home's history. Ensure you obtain the necessary paperwork since it can save you a lot of future headaches.

You should always seek advice from your realtor on how to buy the foreclosed property. However, the experts from Verified Movers suggest that you check the house history before moving in. Repairs will be much easier to perform before you are living on the property. Who knows - maybe you find out something about the home that instantly makes you change your mind

Be Sure to De-winterize the Home

Another thing you should remember when buying a foreclosed home is that it has probably been neglected for quite some time. That means that all its utilities are probably turned off. There is no water in the pipes, and there is no electricity in the cables. If they have all been turned off for a more extended period, you may end up facing mold, rust, pests, and who knows what else. So, avoid the home buyer's remorse, and ask the lender to de-winterize the home before you buy it.

Moreover, this is when you should hire that professional home inspector we mentioned above. Or, at least when you should bring electricians and plumbers to check the installations. You need this kind of professional help if you want to avoid buying a hazardous home.

A home inspector checking the front door.
Caption: A home inspection can actually save your life!

Have Some Money to Spare on Renovations

A foreclosed home is a home in dire need of renovation. So, if you decide to buy this kind of home, be sure to have some money saved aside for all the renovations. In some cases, you will be renovating on a budget - there will be just some easy fixes you can make, some walls you can repaint, and some floors you can replace.

But, in some cases, you will not be that lucky. If the home inspector tells you that you have severe problems with the foundation, roof, installations, pests, etc., you should prepare to spend a fortune on repairs. Moreover, keep in mind that you will not be able to move into that home before all the renovations are done - thus, besides spending a ton of your money on it, you will have to expend your time and energy too.

A home renovation in progress.
Caption: Buying a foreclosed home means doing a lot of renovations.

Replace the Locks

Your new home should be your safe haven. But how can it be if many other people (previous owners, lenders, brokers, appraisers, real estate agents, etc.) have the keys? How can you sleep at night when you know that all these people can enter your new home anytime they want? Don't even think about it - replace the locks before you move into the new city.

As you have seen, there are many things to keep in mind when buying a foreclosed home. We mentioned just a couple of the most important ones. However, you can be thorough and check the HVAC systems, inspect for pests, look for signs of deferred maintenance, see if there is any exterior damage, conduct a sewer scope, resolve any liens, etc. Thus, do your research before you even start looking for foreclosed homes. That is the only thing that can save you from buying a home that is a wreck.