What You Don’t See Is What You Get
When a home is in foreclosure the process may take over a year. What you get when you buy a foreclosed property is whatever the borrower leaves behind. Meaning that there could be several months of neglect as the previous owners ran low on money. Many of the symptoms of neglect are not easily visible to the untrained eye, and can be very costly to fix. With many foreclosed properties, what you don’t see is often what you get.
Standard Repairs are Likely
Banks aren’t in the home repair business. Foreclosed homes will probably need some standard repairs for which you’ll be responsible. You may need to get several things done before you’re comfortable moving into the home, such as replacing carpet, paint, refinishing wood floors and servicing the A/C and Heating system.
The Price of Energy Inefficiency
Energy efficiency is also an important reason to stay away from foreclosed properties. Even those homes that were built just a few years ago don’t have the energy saving features of homes that are being built today. A low price on a home may not look so good when you realize that you’re going to have utility bills that are a few hundred dollars higher per month.
The Cost of a Foreclosed Property is Never What it Seems
Finally, the cost of a foreclosed property is never what it seems. When you work in all the additional expenses associated with a foreclosed property, it doesn’t seem like such a great deal after all. In addition, financing for a foreclose requires more money up front (sometimes the total price.) Banks are more hesitant to finance a home full of question marks.
Most of us purchase a new home because we want a better life for ourselves and our family. Many foreclosed properties just don’t deliver the same peace of mind that newly built homes do. Does that mean there are no good deals out there? Of course, there are some.
Most of us would be very cautious about buying a car at an auction, and we should approach buying a foreclosed property with the same amount of discretion.