Buying a foreclosure might seem like an excellent investment. The potential to purchase a home for a fraction of the current market value often seems like a great opportunity. However, there are some potential hidden hazards when considering the purchase of a foreclosed property which, if you are not prepared, can be disappointing and costly. Here are ten hidden risks to be aware of when purchasing a distressed property.
Destruction of Property – Some foreclosures could potentially be destroyed either by the homeowner or due to vacancy and vandalism.
Poor Maintenance – If homeowners were unable to afford their mortgage payment or were forced to leave, they almost certainly were unable to perform routine maintenance or chose not to maintain the property.
Unclean Property – A home that is left abandoned might be filled with trash or other items. Neglect, normal depreciation, as well as vermin, might be an issue.
Unfinished Renovations – A foreclosed homeowner might have been in the middle of a renovation or changed the living conditions inside to fit the needs of the home on a limited budget.
No Electricity – Most foreclosed homes have the electricity turned off, so it may be challenging to get a thorough overview of the property. The lack of power can also ruin the remaining appliances or allow mold growth.
Remaining Personal Property – Some foreclosed homeowners leave behind personal items due to lack of a place to store them or because they are locked out.
Unmaintained Landscaping – Most often, the lawn and other landscaping have been neglected or overgrown.
No Disclosure – There is no obligation to disclose the problems or issues with the property, so it is of critical importance to have the home inspected by a qualified professional.
Stripped Bare – The property might be stripped of all appliances, copper piping and anything else that might be of any value.
Judgments and Liens – Foreclosure properties might have other liens such as judgment liens, mechanics liens, or tax liens that the new buyer could potentially be responsible.
Buying a foreclosure property in distress can be an excellent investment. However, you must be aware of the potential risks and costs involved in clearing the title and renovating the home. Sometimes, the deal may not be as attractive as it appears.