Help, have never purchased a foreclosure home. What do I look out for and do?

Question by JoAnne L: Help, have never purchased a foreclosure home. What do I look out for and do?
Looking to relocate to San Diego, California area. Noticed that there are alot of foreclosures right now. Do you just pay the back taxes or auction price? Need 4 bed, 3bath, single story, can have frog, full room over garage, prefer walking distance to beach.

Best answer:

Answer by frankie b
Buying a foreclosed home is not for the average buyer.
In theory it sounds like a great idea, but if you are buying at an auction the homes are bought sight unseen. You do not get to enter the home and i have seem some really bad situations for people who have purchased this way. No heating systems, boilers and copper pipes ripped out, all electrical wires ripped out, concrete down the toilet, etc.
Foreclosures are really for the investor who can afford to incur these costs. Also the auction, if won, usually requires at least a five thousand non refundable deposit, and as mentioned bought “as is”.
This means if your financing falls through, you will not get your deposit back. you must be 110% positive the lender is going to lend the money to you. Remember they have to do an appraisal, and if they get in and see the property is in a condition they will not lend in. Well bye bye 5k. I would recommend you contact a Realtor to help you.
Also most foreclosed properties are not the deal people think they are because if foreclosed on a recent purchase (last 5 yrs)
the home most likely is worth less than owed on it.
Leave the foreclosures to the investor.
Good luck,
RE Agent,

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1 Comment → “Help, have never purchased a foreclosure home. What do I look out for and do?”

  1. John Rosa

    Feb 15, 2013

    There will be people out there that will say foreclosed homes are not for the average buyer. That’s assuming the average buyer is uneducated.

    Foreclosures are fun and great investments and they have their pitfalls. Knowing where to spot a good flip is not an exact science, you take into several factors:

    1. Is there a demand for this type of home? (pre and post-rehab)
    2. What are my net profits after the expenses?
    3. What are my tax consequences?
    4. Lastly, how do I find foreclosure listings and auctions?

    The first three questions depends totally on your own research in your area and your own personal profile. For the last part of how to participate in these foreclosure auctions and how to find them, I have a reading recommendation for you below. It should help you find out how to invest in these auctions and how to find them, even participate online.

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