What You Need To Know!
1. Buying a foreclosure involves hidden costs
2. The home may continue to lose value after purchase
Consider the following prior to purchasing a foreclosure or REO property:
AS IS – what this means to a bank is just as written. Most banks have no interest in providing repairs even if they are safety and health issues. If the property you are considering appears to have problems make certain you get the appropriate inspections. Often times utilities are turned off at bank owned properties but sometimes you can get the utilities turned on for inspections by asking the listing agent or paying for this yourself.
DISCLOSURES – In the course of a standard sale, the sellers are required to provide you with all information regarding the property that they are aware of, as is the listing agent. The bank has no such obligations and most of the time might not be aware of any problems, so again, get the utilities on and get the property inspected.
CONTRACTURAL OBLIGATIONS – Contracts written by banks do not necessarily protect you from losing your deposit as in a standard sale. Be certain your real estate agent understands the timeframes in the bank contract so your deposit is safe should you decide to back out of the purchase.
EXPECT SOME CHAOS – Typically banks like to work with their own escrow and title companies and might hurry you on deposits and then take what seems like forever to get the necessary signatures on documents for you. Again, make certain your real estate agent understands the system and will always be prepared for the unexpected to keep the deal on track.
Above all, be patient and know your buyer agent is doing everything to close the escrow for you.