Before you purchase any bank or government foreclosure, you should read this to help you avoid big blunders and mistakes that many buyers make when purchasing a foreclosure. First, and very important, don’t forget contingencies in buying foreclosures. You should only subject to home inspection. Inspections will give you an added feeling of security and peace of mind. You or a professional inspector may find a structural problem or other costly repairs that will take away from your profit.
Wait for the previous owner to leave the property. If the property has homeowner foreclosure redemption rights as a result of judicial foreclosure in your state, wait until that time period is over. In many cases, homeowners can pay off the full amount of the mortgage loan and interest and then repossess the property. Don’t allow the previous homeowner to stay in the home during or after the purchase of the home. And, stay away from those who want to rent the home they just foreclosed on. The previous owner is already in a bad financial situation. Therefore, you can’t expect the previous owner to make a rent payment when they could not make the mortgage payment. If you want to succeed, don’t turn your purchase into a social event…keep it business.
Make sure there is a clear title to the property. Look for senior or junior liens, mechanics’ liens, federal or local tax liens, or home owner association fees. Having a title and insurance search completed can avoid problems along the way. Property sales in foreclosures are subject to the most scams in this country. Understand the foreclosure practices in your state before purchasing a home during a foreclosure auction. Those books that are full of hype and no money down options will mislead you. You are the responsible party for your actions and mistakes. Don’t believe what you hear by people lecturing in free seminars either.
Be involved in every aspect in buying a foreclosure. You need to read the paperwork even if you have an agent. Be at the professional home inspection. You may see something the inspector may overlook. You can even learn how to inspect, what to inspect and how to detect problems. Always expect the unexpected. There will be delays, problems, expenses higher than you anticipated and last minute withdrawals. Whatever happens, you can learn from the books and information rich websites as well as other people’s mistakes.