Buying a home is an exciting step towards your future! While there are many important considerations to make before purchasing a home, there are a few important things to keep in mind if you plan to purchase a foreclosure specifically. If you plan on purchasing a foreclosure in the near future, be mindful of the following red flags.
Beware Of Auctions
Many people warn against purchasing a foreclosure property in an auction setting altogether because of the number of risks involved. When you buy a foreclosure at auction, you do not have adequate time to inspect it thoroughly it for damages. With this, it can difficult to ascertain whether or not a foreclosure property is priced correctly without having a ballpark figure of how much repair costs will be in the future. Also, it is crucial to ensure there are no outstanding taxes owed on the property, as well as any other senior liens.
Understand the Right of Redemption
Have you ever heard of the term, ‘right of redemption’? If you are looking to buy a foreclosure in a state that has right of redemption, you will need to be mindful of this concept in the process. This concept means that a homeowner who has foreclosed on their property has the right to purchase back their home at the same price the buyer paid for it, plus additional interest. As a buyer, it is essential to be sure that you clearly understand the conditions. Keeping these conditions in mind will help to prevent you from wasting money as you attempt to make repairs to the property, only for the property to be taken away from a few months after you have purchased it. While the ‘right of redemption’ period varies, the maximum time frame is up to one year.
Be Pre-Qualified
The foreclosure market is competitive, and with this, properties tend to sell quicker than most people realize. To put yourself in the best possible position to close a deal, you should be pre-qualified. Sellers prefer to work with individuals who do not need to seek out loan approvals.
