The foreclosure buying process may provide a great opportunity, but the risk and possible stress involved may not make it the best buying option for everyone. To help you decide if buying a foreclosed home is for you, consider the following factors:
Are you in a rush?
It usually works out best if you’re not on a time schedule to buy a property. With the court being involved the process takes longer. Plus, there can be competing bids on the court date and you may not be successful in getting the property. Having time constraints may result in you paying too much.
Are you cash ready?
When the time is right, it is helpful if you are able to move quickly, especially if you are going to be competing in court. Financing, as well as inspections, insurance and other research, all need to be completed before the court date; all court sales are unconditional (no subject to clauses for the buyer) and final.
Are you prepared to undertake repairs or renovations?
Frequently (though not always), foreclosed homes are in need of some work. Are you prepared to undertake repairs and renovations? If so, it can be an opportunity to build some sweat equity.
Know you limits...
Before the court date, it is advisable to set in your mind exactly how much you are willing to pay for the property to avoid getting caught up in the competitive process. Being willing to lose can be good protection from making an expensive mistake.
Are you willing to be patient?
It may take a few tries before you are successful in obtaining a property. If you don’t have the patience or the willingness to endure disappointment, this might not be the best situation for you. I’ve seen people come away very frustrated when they were not successful on the court date.
Are you willing to take a risk?
It is important to understand that foreclosures are sold “as is, where is”. The bank usually modifies the purchase agreement to limit their liabilities. What this means is the condition of the property when you receive it is what you get, it doesn't matter what the condition was when you viewed it. This can be a problem if the property is occupied by the owners or tenants, who may not leave it in the same condition as it was when you saw it. This includes appliances, which may or may not be there when you take possession, and may or may not be in working order.
One last consideration…
If the house you purchased has occupants, and although rare, if the occupants don’t leave when the court order requires them to, you will need to involve a Sheriff to have them removed. Sometimes the Schedule A states that the bank will start the process with the Sheriff. This may take some time in which you could be making mortgage payments on a home that you’re not yet in physical possession of. This could cause further complications if you have given notice to your landlord or sold your home.
If you think purchasing a foreclosure home is right for you, or would like to search regular listings, you can view foreclosure listings, search regular listings, of request a custom search on the Searches Page