Are You Sure You Are Ready to Buy a Foreclosure?

Just about every home buyer today is looking at buying a foreclosure as a way to get a good deal. Overall, this is typically true, but purchase a REO (foreclosure) is much more work than many people think. It has some unique challenges that only foreclosed properties have.

• Most banks selling foreclosed properties will require that you purchase the home as-is. In other words, if the furnace goes out between signing the purchase agreement and the closing, they buyer takes that risk and must fix it (the seller still retains the risk if the property is substantially damaged or destroyed). Are you prepared to spend $5000 after you close on that Lake Minnetonka Home to replace the furnace.
• Are you prepared to do an inspection and accept the house if the water (or electricity or heat) can not or will not be turned on? Many banks will not turn the utilities on for the inspection.
  
• Can you be flexible with regards to the closing and possession of the property? Although delays are rare, they do happen. In fact, about 10% of REO properties never actually do close with the original buyer because of delays and title problems. Give yourself plenty of time. Do not schedule the moving van the day of the closing to start moving in. You may not own the home yet!
• When you are viewing a foreclosed home, especially a nice Saint Paul Home, can you look past the fact that the previous owner probably did very little to clean or fix up the home prior to it going into foreclosure? Many REO properties are downright gross. Can you see past that to the possible future beauty of the home and the value?

If you answered yes to these questions, than you are ready to go.  Grab a Realtor and get started.  If you answered no, then maybe you should look at only retails home for sale and not foreclosures.