Foreclosure Facts: Is buying this home right for you?

If your real estate agent wants to include a foreclosure home in the homes you visit, would you say, “Let’s do it!” or would you want to pass? There are a lot of misperceptions around buying a lender-owned home. Let’s clear the air.

When we talk about a foreclosure home this means that for whatever reason the homeowner couldn’t afford to make the home payments and couldn’t afford to keep their home so the lender, often a bank, seizes the home. Bank-owned homes can be great opportunities for a new buyer as long as the buyer understands what they are buying.

Being open to viewing a foreclosure home is similar to viewing traditional seller-owned homes. You’re going to want to do your due diligence such as conduct a walk-through to view the home in-person, have a home inspection, and work with an experienced real estate agent to investigate if there are any hidden debts.

Foreclosure Fast Facts

When it comes to bank-owned homes that are in foreclosure, in general, these things often apply:

There may be problems with the property or the home may be in neglect. Homeowner’s seldom buy a home with the intention of it being foreclosed. Something happens which makes it challenging to make their monthly mortgage payment and if funds are tight, there’s a good probability that repairs can’t be afforded either.

Depending on how long the home has been vacant, there could be issues with vandalism. Thieves may have taken fixtures, appliances, copper piping, windows, or other items of value.

You do want to have a home inspection. Since no one connected with the lender has ever lived in this home, they may have limited to no-prior history on the home or any existing issues. Bank-owned homes may be missing things that typically are included in a seller-owned home.  

If you enjoy fixer-upper projects, this type of home can be a great find and often comes at a discounted price. For the handyman who has the know-how or the person who doesn’t mind hiring help, you can find some incredible deals, make a sound investment, and be able to purchase a larger home for much less.

There can be clean-up needed before you move-in. In some situations, the previous homeowner may have left some of their belongings behind which means you may need to dispose of furnishings before you can move in or begin any needed repairs.

You will want to work with your agent to search for any applicable hidden debts. These types of debts could include failure to pay property taxes or reveal a lien on the home. Also take the time to conduct a title search to prevent any surprises related to who owns the home. This is where having title insurance can help you with an added layer of protection.

Be aware that purchasing a foreclosure home often means you’re buying the property as-is. This is where having a home inspection helps to identify any problems ahead of time.

When it comes to make an offer, be aware that bank’s often counter-offer. It’s simply part of doing business and your real estate agent can discuss how the process works when you’re discussing your offer. The offer should additionally take into account any needed repair or replacement costs. Your agent will be prepared to negotiate the best deal for you.
 
At closing, you may be asked to sign a purchase addendum. This paperwork explains that your final offer could be contingent on corporate approval which can add a few more days to knowing if your offer has been accepted.  
 
There are amazing opportunities to be found when purchasing a foreclosure home. The way to find these gems is to work with a trusted REALTOR® who has experience and will help you navigate through the home buying process. I’m happy to be your guide. Schedule an appointment today so we can discuss these options.

Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers, and citywide was the #2 Top Producing agent in 2020, #3 in 2021, and #2 in 2022. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.