It is no secret that in recent years a great number of homes have wound up for sale on the foreclosure market due to the nation’s economic ups and downs. But many of this large number of foreclosures are actually distressed properties. Foreclosure buyers are advised to thoroughly investigate a foreclosed property before agreeing to purchase it. This can help prevent the buyer from purchasing a home which may not be able to be rehabilitated within their set budget.
There are two kinds of foreclosure purchases. The first is when the home is purchased at auction, and the second is when the home has been repossessed by the lender and is being resold. Purchasing at auction is extremely risky for a number of reasons. First of all, buyers are forced to bid on the property without having an opportunity to inspect it. This makes it difficult if not impossible to determine if there are any repairs or modifications needed on the house and if so what their costs might be. Additionally, the property may have code violations, liens, or multiple mortgages that the buyer will not be made aware of until after the purchase is made, and that can make it difficult to get a clear title.
Buying from a lender is a bit more advantageous in some ways, but one of the disadvantages is that the seller is not obligated to disclose any information about the condition of the house or property. Nevertheless, lenders want the best offer that they can get for their properties and as such are willing to do all of the necessary repairs themselves before selling which increases the possibility that the buyer could find a home in near-perfect condition. But like any other investment, particularly in the seller’s market that is today’s housing market, it is definitely a risk on the part of the buyer.
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