The Issues with Buying Foreclosed Houses
PROBLEMS WITH SUCH PROPERTIES
First and foremost, let is address the elephant: Why are properties foreclosed in the first place?
Homes are put on foreclosure because owners can no longer afford the payments such as mortgages. In such cases, a lot of the properties are left in very poor conditions if they have been vacant for a long time.
These tend to be the dirtiest of the dirtiest. Abandoned and left to waste away by angry, previous owners; now occupied by rancoons, rats and toxic mold. Urgh!
And there have been cases where people have vandalized their own homes after being forced out. I am not talking about a few choice words spray painted on the wall. I am talking about vandalism that the CDC will have to come and clean up. You get the picture.
This is simply, renovations that were DIY projects done by the previous owners or by other non-professionals. Such renos can compromise the structure thereby putting lives in danger. If you buy a house that has been abused in this way, it is left up to you to spend thousands of dollars from your pocket to give it back its integrity.
NO UTILITIES, AMENITIES
It shouldn’t come as a shock to find that there is no running water and no electricity. Especially in a bank-owned house.
These could be caused by the house being empty for so long but it could also be part of the vandalism done by the previous owners. Examples are; burst pipes, broken or structurally unsound walls, vandalism—either by passed owners or delinquents.
That is just the first part of the problem. The second part is the problems with buying the property.
BUYING FROM A LENDER
That in itself is a problem. How? There is less transparency and more bureaucracy when buying a FCL from a lender.
If you are thinking about borrowing money in order to buy a house, think again. Lenders will not give you money for a house they deem uninhabitable.
At the end of the day, there is money to be made in foreclosures but you must know what you are getting yourself into. Flipping old, haggard houses into beautiful homes is fun..and expensive!!