Before moving on to the questions and analyzing more about them, let us first dive deep into what is a foreclosed house. Foreclosure is a legal process wherein, the lender attempts to recover the dues of a defaulted mortgage loan by selling off the property in question. The process culminates in a public auction and anyone from the public can purchase the property. The foremost or let’s say the main benefit of getting this house is it helps in saving. Depending on the conditions of the market, you can get a foreclosed home for considerably less than you would pay for a comparable, non-foreclosed house. In order to avoid any kind of risks, errors, or mistakes, you can consider asking several questions before finalizing the deal for the house. Let us have a look at the list of the questions that should be asked before buying a foreclosed house.
Top questions to ask when buying a foreclosed home
Are there any liens pending on the home? These foreclosed homes are considered to be of a great deal when it comes to terms of price. Banks happen to view the home as an asset. More likely, an unwanted asset. Well, there is no emotion attached to the price of the home thus in this way you can easily avoid the bias of the endowment effect. But you need to keep in mind that a foreclosure house does not always mean a good deal. Any kind of lien on the property will immediately transfer to you the moment you purchase the home. Which can be a major drawback if there are a lot of liens.
How does the damage to the house affect the value of the house? The previous homeowner tried to save the home to the extent he could. The owner must have started building hard feelings for the banks when they must not have been cooperative enough towards them. The result of this is that the home is considered to be in less than perfect condition. For instance, you could witness broken mirrors and doors, spray-painted on the walls, distorted lights, and so on. You need to remember that you will be signing up or getting the property in the condition it is in, no matter what. You will be required to work on the condition and the appearance to bring it back to the former condition.
Has the home been sold in the past five years? You should know that the previous homeowner won’t be there to answer all your questions and queries and you will be expected to do your due diligence for the same for your own good. If the home has been on the market recently, the disclosures of the previous seller will be floating somewhere in the market. You can ask for the buyer’s agent’s copy of the disclosures. Though the information might not be up to date you need to understand that something is always better than having nothing at all in hand.
Has the home been through the process of inspection recently? Other than the surface and basic issues there might be other issues and things that you can consider would be there and you will be required to deal with them. The inspection will reveal almost anything and everything about the property that you should be aware of and need to know. But the concept of inspection comes pretty late in the process. To ensure you are not making any wrong decisions you can ask the buyer’s agent if they can help you with an old copy of the inspection. This will help you with an insight into the background and the history of the house and with the help of this you can decide how much you should offer for the house.
How long has the house been unoccupied? You need to understand the fact that the longer the home has been unoccupied the more issues you are going to face about it. Make sure you do your due diligence on the structure of the property and analyze the plumbing and the appliances properly. These alliances are likely to take the biggest hit with the disuse.
Are there any other foreclosed homes in the same area? If there are other foreclosed houses in the same area then there are chances that the home that you are interested in will likely drop in its value. You need to understand and keep in mind the fact that an area with several foreclosure properties is often a mental red flag for potential homeowners. You need to get this straight that there must be some or the other reason as to why several properties in the same area are foreclosed. If you happen to be nervous about the same, then you need to keep in mind that while the home’s value might dip for a little bit, you will be making an investment for the big and long haul. In the same- what about the location of the house or other things matter to you?
What is the neighborhood like? Look if it is the kind of locality and community you would like to reside or live in? Make sure you look for the community of the school districts, several families look for the same before planning to move or finalize the site or property. How long does it take to commute there? Remember, you are not just buying the house, you are getting yourself a new home. Thus, make sure everything works the best for you.
What does your agent think of the home? While you don’t really have to go with their opinion, their opinion really matters for they have more experience with the foreclosed properties and houses than you do. Ask and look for their opinion and figure out how they tell a good foreclosed home from a bad foreclosed home. And then, figure out where your potential home happens to fall on the scale.
Thus, this is the list of questions that you should be prepared to ask before buying or finalizing a foreclosed house. If you are new to investing in real estate then you can consider seeking help from Better Capital and get the best guidance and help on the same. For more information, you can visit our website at https://www.bettercapital.us/about and clear all your doubts and queries with us.
