We know how daunting buying a new home can be, especially given the variety of options available to buyers in this market. One area that really seems to trip buyers up is foreclosures, so if you feel like you’re in the dark – don’t worry, you’re not alone. While it’s true that these deals aren’t without their complications, and there is risk involved (there’s risk involved with buying any home), they can be a great option for buyers looking for some serious deals. Below you’ll find some advice and tips that will hopefully assuage some concerns, and if you’re still left wondering, please give us a call! We would be more than happy to discuss the process with you in person.
In most instances, when you buy an REO (bank-owned property) you’ll be asked to sign an “as-is” rider, and that’s precisely what it means: you get the property as it is, where it is. The bank will not help you fix issues later, nor will they help you clean the property before you take possession. Usually, the listing agent has advised the bank to do any repairs they might do before the listing has gone on the market. A safety or health violation found upon inspection is probably the only instance in which a bank will repair anything at its own expense. The lesson? If you want to buy a foreclosure and the home is in questionable condition, hire a contractor and have them give you an estimate for any repairs. Does it cost money? Yes. Will it save you money and grief in the long run? Yes!
If there are disclosures (in some markets, an “as-is” rider is sufficient), the bank won’t be able to attest to any property damage, or any issues that would otherwise clue a buyer in about problem areas. Bear in mind, the bank (or its rep) hasn’t lived at the property, so most likely, they’re telling the truth when they say, they simply don’t know about any past defect. So, what’s a buyer to do? Inspect, inspect, inspect – everything and anything. Again, these cost money, but not getting them could cost you a lot more.
Our friends at Trulia have some great insider tips for buyers interested in buying foreclosures – little tricks of the trade that make this process a whole lot easier:
• Vacant foreclosures often have their utilities disconnected. Work with your agent to make sure the utilities get turned on – even for a single day – so that your property inspector can run the water taps, test the stove and dishwasher, see if the water heater and electrical outlets work, and so forth.
• If appliances are there, the bank will probably leave them there, even though they may not have technical “legal” ownership of them, so they may not be included in the contract, like in a “normal” home sale.
• However, the bank will not give you any sort of warranty on appliances, so try to obtain any warranty coverage you want or need elsewhere – from a home warranty company or, potentially, the original manufacturer/retailer.
For more information, visit their full article:
4 Tricks and Traps Foreclosure Buyers Need to Know.
As always, your best asset is a knowledgeable agent who has been through the process and has experience dealing with banks (might we also recommend that they’re one of the fabulous agents at d’aprile realty?). Your agent will know the ins and outs of bank contracts, when you can pull out of a deal (if necessary) and how and when to submit earnest money.
Can the process be long and arduous? Sure. Can it yield great results? Absolutely. We know it’s difficult – your home is a high-stakes venture – but try to be patient, expect the unexpected, and be willing to be flexible. You could get the deal of your life on the home of your dreams.
