Foreclosure
Foreclosure is a process that transfers the right of home ownership from the homeowner to the bank or lender. A home goes into foreclosure when the owner defaults on his mortgage loan payments. Once a homeowner receives a notice of default, they’ll usually have 2 – 3 months to make payments before the bank officially forecloses on the home. Foreclosure is a costly process and can have negative impacts on the homeowner’s credit score.
Source: Redfin (Real Estate Glossary)
PLEASE CONSIDER:
Purchasing a foreclosed home could be a great way to pick up a terrific deal on a house and the process is not complicated. But often foreclosed homes that have been abandoned or neglected for months—or even years—often come with hidden costs that can turn that bargain into a money pit.
Foreclosed properties often present with substantial damages or defects, like defect or missing appliances, A/C’s, mold, overgrown backyards and unmaintained pools, water damages and plumbing problems, wiring issues, cracks in foundation or bad roofs. The previous homeowner has no reason to spend the money or effort to make repairs, as the property is no longer his, and he sees no benefit if the house fetches a higher sale price. A bitter homeowner may go so far as to purposely cause damage to the property.
This, coupled with the fact that you likely will not get to inspect the property prior to buying (especially if auctioned), creates a significant risk for you as a buyer. While it is certainly true that you can save – you must seriously consider the effort and the risks you undertake and what you will truly receive in exchange.
Foreclosed properties often present with substantial damages or defects, like defect or missing appliances, A/C’s, mold, overgrown backyards and unmaintained pools, water damages and plumbing problems, wiring issues, cracks in foundation or bad roofs. The previous homeowner has no reason to spend the money or effort to make repairs, as the property is no longer his, and he sees no benefit if the house fetches a higher sale price. A bitter homeowner may go so far as to purposely cause damage to the property.
This, coupled with the fact that you likely will not get to inspect the property prior to buying (especially if auctioned), creates a significant risk for you as a buyer. While it is certainly true that you can save – you must seriously consider the effort and the risks you undertake and what you will truly receive in exchange.
Source:Â Sfgate.com
