Around the nation almost every neighborhood is infected with atleast one or two foreclosure homes bringing down the property values of the whole community. Not many good neighborhood are spared. Thanks to the Subprime crisis and fancy mortgage lending. Foreclosure homes were all over the place but the numbers have dropped dramatically according to the RealyTrac which tracks the foreclosure activity around our nation.

The reason, there is a great demand to get a house for cheap not just from investors but recently more home owners getting in the game. Foreclosure homes give good opportunity for many first and new home buyers who can really afford to get into a home at a very low price level in a decent community. As one analyst said, “You can find terrific values among foreclosures, especially if they’re not in too bad shape. But, remember, these houses are discounted for a reason.” With that in perspective, whether you are home owner or an investor, you better take proper measures while buying a foreclosure property. One side, it is about getting a great deal but on the other side, are you getting the property worth for that price?

Here are few things which you should be aware while looking to purchase a foreclosed home,

• How old is the home?
  This can be easily found by going to appraisal district website(hcad.org) or other real estate websites like zillow.com. You can also ask the Realtor to send the report. Homes that are more than 30 years old may have a bad roof, a/c not cooling, failing plumbing system or inadequate electrical wiring.
• Is the house been vacant for long time?
  Ask your Realtor to check how long the house has been vacant or may be listed in the market. You can also check them by going to websites like Zillow.com/Trulia.com by checking how long its been listed in the market. Sometimes foreclosure process takes years depending on the financial institutions. Be cautious of a foreclosed home that has stood vacant for more than a few months or had its utilities shut off a long time. The condition of a home can deteriorate quickly when heating, cooling, electricity, and running water have been turned off for awhile.
• What is the condition of the home?
  Are there molds and moisture contents inside and around the house? Are there broken windows, gutters hanging down, or damaged siding? It is too good to be true. If the house looks bad from the outside, it’s probably worse than you think. But don’t go by the outside look and take an appointment to check out inside and make a decision accordingly.
• What about items in the home?
  Foreclosure is tough on the people and previous owner might be frustrated or don’t want to leave anything valuable before vacating. So many times you would see houses which are in worse condition with stripped items like kitchen cabinets, built-in light fixtures, bathroom tile, water heaters, air-conditioning units, and hardwoods. If you know of a contractor, ask him to come with you to give a cost estimate on the items which needs replacement. If you don’t know anyone, ask your realtor and he can help you get in touch with one. Even if it is sold as-is, it is better to get an idea about expenses involved before making an offer. An important note which actually bite my client once was to see whether the house is in livable status to get conventional financing. Check to see atleast all important components like A/c, heater, roof are good condition in order to get financing. My client found that out in hard way and lost the good investment property because of this very reason.
• Whether to do an inspection or not?
  A foreclosure home needs an inspection. Don’t try to save on it. Housing experts encourage buyers to get a home inspector to look at the property to make sure whether they find more than you have discovered. They know much more than you know from the job and experience so it is always recommend to get another eye to look out for problems before it’s too late

These are five important things need to be checked before you proceed in purchasing a foreclosure property. As I said earlier, it is wise to see whether the condition of the house is worth the price they are asking instead of just looking at getting a good deal.

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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