Purchasing a foreclosure can often land you a great deal to which you can add considerable equity. According to the Chicago Tribune, many foreclosure properties may be in good condition and you can create immediate equity with just a little work. Here’s how.
Aesthetic vs. major damage
Missing light fixtures or bits of carpeting are common in foreclosed homes. According to Zillow, future homeowners should be prepared to replace appliances or cabinets in such structures. These constitute aesthetic damage that can often be easily repaired.
Major damage is anything that would show up in an inspection and prevent the loan from going through, or create doubts about the overall safety of the house. This might include foundation issues or possible roof leaks that were long ignored.
Bank closing procedures
A foreclosure property will often be haunted by the specter of a long closing process due to extended title search and tax records. These items need to be cleared to deliver a clean title to the prospective buyer.
Foreclosed properties owned by a bank will deliver on various timetables depending on how the bank operates. According to US News, unfamiliarity with the law can be detrimental to the closing process.
Banks are not usually expert at selling a home. Home buyers should be aware of additional solo work outside of what the agent can do.
Several variables related to the process of a real estate transaction may affect how soon the closing can occur:
• Relative location and comparables
A foreclosure property will sometimes be offered at a price lower than the market value. Sometimes the price can still be above market value if there are other properties in the market. The appraisal can slow down the process down considerably to conduct adequate research.
• Lack of details about the property condition
If the record of property repairs or a seller’s disclosure are absent, that can slow down the process with the bank until these resources are obtained and verified. A more thorough inspection is required and can be extensive.
• Lack of pertinent title information
Check the plumbing and de-winterizing techniques
Many homes under foreclosure will set for months without utilities. The home should be winterized in colder climates to prevent burst pipes or other major damage that would make it impossible to sell, but an inspection will determine what plumbing issues might exist in the structure.
Check the home’s history
There’s usually a story when it comes to a foreclosure property. That story may include the number of occupants before it ran into financial trouble as well as what kind of neighborhood it’s in.
Real estate agents often recommend changing the locks upon move-in. Purchase of the home should include a thorough inspection on the working order of doors and windows to ensure security. Evidence of break-ins should be noted.
A foreclosed property can be a real gem of a find … or more headache than it’s worth. If it’s in a, a foreclosure opportunity might be a good risk. It just takes a bit of research and work with a reputable real estate agent to figure out which it will be.