When purchasing a foreclosure, you can obtain some incredible deals on properties that are below market value. However, buying a foreclosure home is often different than purchasing a property directly from the seller, especially if the home is bank-owned. Therefore, before you sign on the dotted line, make sure you check for these five unpleasant – and expensive – surprises to avoid when buying a foreclosure.
When a property remains vacant, such as is often the case when the lender obtains ownership of the property, it can become difficult for the home to be maintained and protected. As a result, vacant foreclosure properties are often subject to everything from vandalism to theft. One of the most commonly stolen items from a home includes home wiring, specifically copper wiring.
Wiring can be incredibly expensive to replace; therefore, before you purchase a foreclosure property (or any home for that matter) make sure that the wiring is not only present but also intact. When you have to shell out money to replace missing wiring it eats into your profit margin (if you are purchasing foreclosures for investment purposes).
Along with stealing copper wiring, sometimes foreclosure properties will have everything from faucets to lights stolen while the property is vacant. Although these items are often relatively affordable, even just replacing fixtures throughout the entire house can quickly become expensive.
Regardless of whether you are buying a foreclosure for investment purposes or for a new primary place of residence, it is absolutely essential that you closely inspect the property for water damage. Any signs of water damage should be thoroughly examined as they can be indicative of a leaky roof or plumbing-both of which can be prohibitively expensive to repair.
Waste Management Issues
Another home problem that is often hard to detect involves waste management issues. More often than not, the part of the sewer line that goes through your property is your responsibility. Therefore, if there are any issues with this part of the line – such as cracked or overgrown pipes – then you will have to shell out serious money to make the repair. This can be very difficult to spot and often requires a specialist’s help.
Finally, when purchasing a property, make sure you obtain an inspection of the home’s infrastructure to determine if the home is infected with termites. These termites-and other unwanted pests – can eat away at the infrastructure of the home and cause a significant amount of damage. You should definitely hire a professional to conduct a formal inspection to determine if terminate damage is present, since it is often difficult (even impossible) to spot with an untrained eye – especially with wood that looks healthy from the outside.
Regardless of whether you are purchasing a foreclosure for investment purposes or for your family’s new primary place of residence, it is essential that you know what you are purchasing before you sign on the dotted line. Everything from missing wiring and fixtures to undetected water damage, waste management issues, and insect damage can significantly cut into your profit margin (if you are an investor) and can cost a fortune to repair.
Keep in mind: when you purchase foreclosures, you often purchase the property in “as is” condition. Therefore, make sure you are fully aware of the needed repairs before you purchase the property and determine if the listing price plus the cost of repairs still makes the foreclosure a good investment opportunity.