Foreclosure pitfalls Cost: Save time and money, but only up front. After fix-up costs it usually doesn’t.
Warranty: Nobody stands behind the work. Not even the bank. Nothing is backed up. AS IS means often the home has been abused.
Eviction: You may have to evict previous owners.
Damage: Damage to the home can be expensive and time-consuming to fix.
Liens: Possible liens and / or judgements waiting for you
Health: Health hazards could include mold, pet dander, bug infestations or items you don’t even want to think about.
Style: The home comes as is. Used homes often have dated and inferior tastes and styles.
Disclosures: Foreclosures can be exempt from state disclosure laws.
Time: Complicated foreclosure processes can take months.
Community: Declining neighborhoods typically have several foreclosures, which means your property value might continue to diminish.
Sabotage: Previous owner can sabotage the home: clogged drains, wiring torn out, unkempt landscaping etc.
Energy: Foreclosed homes that have been run down can also be less energy-efficient due to lack of care and outdated building materials.
Appliances: Appliances can be damaged or even stolen by previous homeowners.
Eyesore: Foreclosed homes are often the eyesore on the block.
Banks: The bank is in control.
Repairs: Repair costs have to come out of pocket and may or not be rolled into your mortgage.
Choices: Limited choices and a complex bidding process put you at the end of the line. |