Buying a foreclosed home may seem like a great deal, since the bank that’s selling it would rather unload it at a loss than stay on as owner. But foreclosures come with a lot of risks — including vandalism by former owners or theives who strip vacant homes of just about anything that isn’t bolted down — and even things that are (you know, like toilets).
The Wall Street Journal has a handy guide to buying a foreclosure, and the tips boil down to some practical and simple concepts:
1. Shop around. Most foreclosures aren’t listed in traditional places like Realtor.com or local MLS listings — at least not with the word “foreclosure” plastered all over the ads. And many of the companies that track foreclosures, like RealtyTrac and Foreclosures.com charge as much as $50 a month. One free source: Bank web sites, some of which list properties they’re offering.
2. Get an inspection. Well, yeah. But getting a foreclosure inspected is a little trickier than your run-of-the-mill house. After all, there’s that vandalism thing. As WSJ points out:
“We have all heard the stories of people ripping the copper pipe and wiring out. People have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall,” [home inspector Dan] Steward says. Some have ripped out toilets and kicked in walls or left faucets running before vacating the house, often out of anger.
3. Be Prepared. Right, another one from the traditional home-buyer’s playbook (not to mention the Boy Scouts). But, again, things get a little trickier in foreclosures. For one thing, don’t expect the bank to cut the price because of problems with the home; that’s already been factored into the price (yeah, even the missing toilets and wires).
So, is it worth all the work? Maybe; foreclosures can hit the market at 30% below their market rate, so if you find one that’s actually worth buying, it could be a sweet deal. Just watch out for those missing floorboards before you move your furniture in.
How to Land a Foreclosure House [WSJ.com]