Is buying a foreclosed property a bad idea?

Question

Assume that:
1. You can inspect the property
-or-
2. You cannot inspect the property

Answer 1

I bought a foreclosed home last year. It was shown by my Realtor, and I had ample opportunity to inspect it. It was in horrendous condition, but for the price it was well worth all of the work. My husband & I have been rennovating since December (doing the work ourselves). We stole this house!

I would avoid a pubic auction, where I could not inspect the property. We at least knew that the structure itself was sound. All of the work has been to the interior, and we have not had to go to the "bones" of the house.

Answer 2

If a foreclosed property is listed though a realtor the bank's REO department listed it. This is a great opportunity. When you make the offer for full price or a little less you ask for allowances for repairs. The bank will pay those, provided you attach the estimates. The bank in a lot of cases will also pay the closing costs. They want to unload because they are paying taxes, maintenance, winterizing etc. It's a non performing asset to them.

They may even finance it for you.

Now HUD foreclosures can be a heartbreaking experience even if you have all cash. You are required to place a sealed bid. Highest bidder gets the property. Then if you win you have to pay for, and do all the repairs.

Other similar deals are called short sales. That's a deal where the lender has agreed to release the lien for less then the payoff.
These can fall through if the realtor tries to get more than a 4% commission, or the seller tries to get any cash out.

You are able to inspect any of these properties. Never buy a property that you can not inspect.

Answer 3

A foreclosed property is just like any other property out there. They can be a million dollar home or a shack. It just so happened that the bank took it back because the owner could not make payments. Or the government seized it.

Keep in mind that there are a lot of people out there that look for foreclosures, and you will NOT be the only one making a bid. There are investors with lots of resources that can outbid you very easily.

I would stay away from ANY property that you can not inspect, this just would not make any sense. Even if the property was inspected recently by someone else, it is not good enough to trust blindly, you must verify.

Answer 4

It is the best way to buy a house. And yes, you can inspect the property; that is your right as the potential owner, and if someone is telling you that you cannot inspect the property, run as fast as you can in the other direction; they're hiding something.

Answer 5

It may be a bad idea if you cannot inspect the property because you have no idea what you're getting yourself into if you buy it.

Answer 6

well if the house is foreclosed, it usually means that the owner could not pay for it anymore or it was abandoned. go inspect it first. because the ads wont tell you anything about the sink holes and 'what not' to get someone to buy it. be a responsible consumer.

Answer 7

This is a complicated issue. Buying and reselling foreclosures, as everyone will tell you, is dangerous.

Read this article, for starters:

http://foxnews.smartmoney.com/home/buyin...

You need to know real eastate, and all its peculiarities like the back of your hand.

You have a lot of homework to do. Be careful, but it CAN be a good way to make a living. Good luck!

Answer 8

i would steer well clear of any property that you werent allowed to view, or at lest get a survey on - buyer beware!


if you are happy with the state it's in, then the price you pay is up to you and seller (mortgage co?) to agree on, unless it goes to auction.

build in (!) renovation costs, legal fees etc to any likely price and profit expectations, along with your OWN mortgage payments, if you intend to get a loan to pay for it, while doing it up..

Answer 9

it all depends on the purchase price. If you can buy it cheap enough & fix it up yourself, it may be a great deal.