We’ve lived in our foreclosure home for almost four years now. It’s been a long journey and learning process from day one. If you’re thinking about buying a foreclosure, here are 5 things to think about before buying a foreclosure home.
If you’re a fan of DIY home improvement shows on TV and wish to tear into an old home and give the home a much-needed facelift, proceed with caution. It’s not for the faint of heart. It takes a lot of work, dedication and know-how. I jumped in feet first with the purchase of our home. It was a mind opener.
I use the Internet a lot for tips to remodeling. If I’m unsure how to repair something I research the subject online first. And, if I still can’t figure it out, I have a DIY friend who’s only a phone call away.
- Use a real estate agent for background checks to look for loans on the property. You don’t want to end up in a bind. Start out the purchase without any conflicts.
- Have someone you trust to inspect the home first. Reale Estate agents don’t always know the story behind the house. Lots of times the house is as-is leaving you vulnerable to issues an everyday person would miss. Take someone with you for an extra set of eyes. They might be able to point out issues you could miss.
- Do you have adequate funds for repairs? This is a biggy! Buying a foreclosure can create a hardship in a minute. The house might need a serious upgrade or lots of cosmetic repairs. Our house needed tons of cosmetic repairs which added up quick even though we made the repairs ourselves.
- Does the house come with a home warranty? Our house came with a home warranty for the first two years. Not all foreclosures come with a warranty. If your house comes with a warranty, find out who pays the premium, the price of the deductible and what is covered. Our warranty covered all appliances in the house regardless if it was included with the house or we brought the appliance with us when we moved in. The only catch was we had to use a repairman of their choice. If the appliance was fixable we paid the first $100 or they replaced it with a new model.
- Make an offer that works for you. When we bought our house we had limited funds for repairs so we wanted to make our dollars stretch. We knew when we purchased the house most of the repairs were cosmetic, but we wanted to at least make the house at least presentable. To cut costs we included the closing costs along with our offer. Plus, we requested to have all utilities turned on prior to closing. This eliminated utility issues. The bank wasn’t happy about that request, but they accepted.
By adding the “utilities turned on” to our offer it saved us in the long run. Our house was unoccupied for about a 1 1/2 years which can play havoc on a house. The house didn’t pass inspection with the electric and gas company resulting in repairs to be completed prior to turning the utilities on, which were picked up by the bank.
On top of the electric and gas repairs, the house was broken into and the copper plumbing was stolen. Again, you can’t turn the water on if there isn’t any plumbing in the house. The bank replaced all of the plumbing in the whole house. That was a win-win for us.
In the end, we made out pretty well. We purchased the house at a fraction of the cost while taking very little risk.
These tips saved us from a lot of heartaches. I hope the 5 things to think about before buying a foreclosure home help you turn your foreclosure purchase into a less risky purchase.
Was your house a foreclosure home when you made the purchase?
Do you have any additional tips to add? Share your foreclosure tips or stories in the comment area.
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