Is a Foreclosure a Bargain or a Nightmare Waiting?
For example, a foreclosure could have legal issues. Before buying a foreclosed home you will have to do thorough research — or hire a title company or lawyer — to make sure there aren’t any additional financial or legal liabilities attached to the home. There may be liens on the property for unpaid taxes, home owners’ association dues, or the home may have been put up as collateral on other loans that weren’t paid. You could become liable for thousands of dollars of debt you weren’t aware were attached to the foreclosed home.
As soon as you take ownership of a foreclosed home, anything that breaks or any problems that arise are your responsibility. This could cost you lots of time and money that you may not have budgeted for.
With a new home, maintenance won’t be an issue for a while with the brand-new appliances and systems. And if something does go wrong in the first year, there is often a new home warranty that guarantees repair or replacement.
Foreclosed homes also often haven’t been taken care of by former owners who knew they were going to lose the home. In some cases vandals, thieves or even the owners have damaged the home, removed appliances or torn apart walls to remove copper pipes that are valuable as scrap metal.
A foreclosed home could have been sitting vacant for months or years, and if it wasn’t properly secured, there could be significant damage from water, mold, weather or pest infestations. It could cost you thousands of dollars and a lot of time to bring a home that was allowed to deteriorate back to a livable condition.
You also don’t have to spend time or money changing someone else’s design preferences with a new home. No tearing down wood paneling, repainting walls, or replacing outdated flooring. Your preferences are included as the home is built, and they are there waiting for you the day you unpack your boxes.
With a foreclosure, you don’t know how many renovations or repairs have been made over the years, or who made them. There could be faulty wiring, weakened structures or other conditions that could be dangerous and costly to bring up to safe and modern standards. To protect yourself, make sure you have the home thoroughly inspected during the allotted inspection period that is given to you by the foreclosure company that owns the home.