What You Need to Know Before Considering A Foreclosure
We’ve all heard that you can get a good deal on foreclosure properties. While it may seem like a great investment, we want to share with you what possible setbacks you need to be aware of, as well as the potential benefits that can be gained.
Although lenders can vary on policy, they often don’t consider foreclosure until a homeowner has fallen 90 days (or more) behind on payments. Their primary goal is for the owner to keep their home, but in the event it cannot happen, the foreclosure process can begin. Once a house has been foreclosed upon, the bank will work fairly quickly to attempt to recoup their money. Most often, foreclosure properties are sold in as-is condition, meaning they are sold without guarantee and without warranty.
The Possible Setbacks
Foreclosure occurs when a lender has taken back a property because the owners fell behind and could not catch up their payments. When purchasing a foreclosure property, you’re basically buying someone else’s misfortune. Their emotional turmoil and anger towards their financial situation may be taken out on the home, causing a lot of damage. It’s not uncommon to see holes in walls, damaged fixtures, or ruined flooring.
It’s almost a guarantee that when a homeowner can’t afford their monthly payments, they also can’t afford maintenance and upkeep; so buyers are typically faced with an extensive list of repairs that have been ignored.
With foreclosures, homeowners often take anything of value that can be removed from the property such as window coverings, appliance, fixtures etc. You’ll want to budget replacement for items like these.
The Potential Gain
While many foreclosures are in pretty rough shape, there are some exceptions where buyers only need to do a few minor repairs, add a fresh coat of pain and replace the appliances and/or window coverings. Depending on the purchase price, adding the cost of replacement, repairs and upgrades could be much lower than the market value of comparable homes in the area. There could be potential for a good return on investment provided the cost of repair and additional expenses don’t exceed resale value of the home.
The Professional Support
By educating and surrounding yourself with experts in the foreclosure process, there is the potential to gain a decent return on your investment. Enlisting the support of an experienced Realtor who can guide the process, and negotiate the best price for you will set you up success. Hiring a home inspector who can provide a detailed report on necessary repairs will help you create a complete budget for repairs and renos. Of course you also want to hire a lawyer to ensure your purchase is protected during the closing process as well.
If you’d like more information about foreclosures, or are considering buying or selling a home, give us a call. It is always our greatest honour to serve you!
Jason Rustand with RE/MAX Real Estate serves with the highest level of integrity and excellence every time. For more info on this topic or others related to real estate contact LIKE our Jason Rustand Team Facebook page, call Jason direct at 780.980.2828, email firstname.lastname@example.org or visit WeSellLeduc.com
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