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Foreclosures: to Buy or not to Buy
Author: Kelli Bennett
When a home gets repossessed due to a delinquent mortgage, they will often sell
it at a great rate, just to get their money back as soon as possible. Sometimes,
there's great deals to be had in purchasing bank or real estate owned property.
But not always. With bank owned properties, just like with any real estate, it's
important to do plenty of research to find out just what you're getting.
As a general rule, banks will not make repairs to properties they own, nor be
held liable for damages therein. If a home is being sold "as is", it may be up
to you to find out just what is wrong with the home or property. Hopefully,
information about the home will be readily available, and a good realtor can
help you investigate to find out if the "as is" is something you can live with,
or easily repair yourself. If a home is a complete dump, has mold damage or
structural damage, even if it is priced at $20 below market, it isn't a good
deal unless you have the skills to fix it up. Unfortunately, with things like
mold damage, they can be very hard to fix, and are often hidden inside walls. In
these cases, it might be better to find a different home.
However, if a home is in a great area with a nice property, it may be worth the
price just for the land, or perhaps the house has amazing heritage character,
and you the buyer are a skilled crafts person. In this case, the property could
be gold.
Either way, be prepared to sign a lot of addendum's and clauses, exonerating the
bank from any responsibility for the home or its condition after the sale.
Further, banks often place a clause charging you money for every day you are
late in closing. So keep this in mind when you negotiate, especially if you will
need a lot of inspections to determine the state of the home.
Banks never want to own a home or property. It just isn't cost effective for
them. They aren't real estate agents, nor carpenters. They're money lenders.
What they want is to lend money to a borrower and collect mortgage payments.
Sometimes this is a motivating factor in them selling a high quality property at
a below market rate, but this isn't always the case. Whatever the state of the
house, you can be guaranteed of a motivated seller. If you've done your
research, and are willing to accept the conditions the bank applies, then by all
means, make an offer.
