Foreclosures:Don’t let the low price lower your guard.

An unfortunate by-product of these difficult economic times is the rise in home foreclosures. This has led to more bank owned properties coming up for sale. And while this can provide an opportunity to purchase a home at a discount, a potential buyer must still exercise caution when approaching a foreclosure. Below are suggestions to keep in mind when evaluating a purchase.

1. Budget your money and time carefully. The often initial low price is not the whole story. Properties that have been foreclosed may have been neglected for quite some time. This may result in repairs which will need to be included in the budget for the property. A potential buyer will also need to budget their time as well since purchasing a foreclosed home can often take more time than a traditional purchase.

2.  Inspect the home carefully yourself and engage the services of a professional home inspector. You need to know exactly what you are buying. Also, it is prudent to engage the services of a real estate agent familiar with the foreclosure market. An expert is a good ally for determining if the property is truly a good deal.

3.  Research potential liens and unpaid taxes and who will be responsible.

4.  Determine how long the property has been vacant. The longer the property has been vacant the more likely there will be repair issues due to neglect.

5.  Take in to account the landscaping. If the house has been neglected so have the grounds. Not only will the landscaping be an expense itself, overgrown trees, roots, etc. can lead to additional damage to the roof, gutters, cisterns, etc.

6.  Don’t expect a quick profit. Not only will most properties require time and money to be spent on rehabilitation, it may be some time before home prices rise to a level allowing the property to be sold for a profit despite the initial low purchase price.

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