People are mostly bothered by this question. After learning the pros and cons of foreclosure, sometimes it becomes difficult to decide whether or not it is the best option for a land owner. The disadvantages of foreclosure homes can be pretty drastic if not measured out earlier. However the temptation to become a home owner still pushes you into the deal.
In order to get the best out of foreclosure, you need to search for foreclosure homes in the nearby areas where you live in at present. This way, you may be able to answer most of the crucial questions yourself. There was this couple who were renting in Miami for a few of months. After some time, they started planning to buy a new home using their savings in the bank. Upon investigating, they learned about the benefits of foreclosure homes and decided to give it a try. Since they were fully aware of their present neighborhood’s environment and were comfortable living with it, they decided to look for foreclosure homes there. The right bid finally made them the proud owner of their dream home in Miami.
This little inspirational story might motivate you to go for foreclosure homes but let me share some interesting facts that you might not have known about buying foreclosure homes.
Homes are foreclosed because their previous owners may have not paid the installments or have not paid taxes for more than 3 years. The ac department then puts the foreclosed house for auction. However, there is usually a teeny tiny legal clause, which can give the property back to the original owner, if he pays all the outstanding taxes within two years, even after the auction has been awarded to a new home owner. In such situation, you can only get back the bid price you have paid when you have purchased the foreclosed property. Any expenses on the repairs you have made during your stay will not be compensated to you. This is the reason why title deeds are given to the auction winners after two years.
An interesting scenario in lieu with this legal clause is when your bid wins a house which probably needs new flooring. You installed new flooring when you moved in and after two years time you were informed that you need to evacuate your house – you have installed this flooring for someone else! This situation may seem funny now but it can turn into a real disappointment if it happens to you.
To avoid this kind of scenario, it would be best to choose a foreclosure auction that allows bidders to personally inspect each property available, thus avoiding repair expenses when you move in after winning in the auction. You can thoroughly investigate and make a list of all the repairs required. However, you need to discern whether or not these repairs can be postponed for as long as the two years allotted time, until you are certain that the property is yours for keeping. Place a bid on the property that doesn’t need major repairs. You can repair, replace some things, or decorate the house to your heart’s content when you have the title deed with you.
Closed biddings are often preferred by bidders. In closed biddings, they are required to place a written bid which is then by sealed in an envelope at the FHA board. All the bids are kept safe ‘til the day of the auction sale. When the big day arrives, the bids are opened in front of the public audience and the best bid wins the auction.
The house you buy through a foreclosure auction may need loads of work in order to make it livable. The couple I mentioned above has spent more or less five thousand on the maintenance of their house. Cosmetic repairs are huge in foreclosed homes. The couple had termed the house livable when they placed the bid. However, they were really surprised when small flaws started to stand out once they moved in. One of the water pipes has exploded due to winter freeze. The house was still not a bad deal for them because of its market value and demand. Even after spending five thousand on repairs plus the bid price, they could have gotten a profit of 30k if they sold the house. This is a very good example of a wise buy!