What are the dangers of buying a foreclosure house?? ( read details )?
I just looked at foreclosure homes and I read somewhere that there could be dangers to buying a foreclosure home. Unless I'm mistaken, if a home costs 400k, and the opening bid is 200k, and let's say I win the bid, all I would have to pay is the 200k???? If so, What would be the danger?
- zipperLv 611 months ago
All the repairs that you will need to make, the wildlife running around in the placde, mod there could be a load of problems you mite face in repairs. House that go into foreclosure happens because people that lived there could not pay their bills, what other things may of been unprepared.
- STEPHENLv 711 months ago
No dangers whatsoever as long as it's sold as vacant. The bank just wants to offload the property after having to foreclose. You can get massive bargains buying foreclosed properties. Just make sure you get a good survey done.
- babyboomer1001Lv 711 months ago
There is no "danger" in buying a foreclosed property. Foreclosed properties just means that the prior owner could not make the payments anymore, probably lost his job, so he stopped paying and the lender took the house back. That's all it is.Source(s): Certified Paralegal, with 25+ years' experience & with Foreclosure law experience.
- JudyLv 711 months ago
Openng bid is not what you pay if there are other bidders. Final bid is what you'd pay.
- How do you think about the answers? You can sign in to vote the answer.
- SlumlordLv 711 months ago
It depends on the type of foreclosure and other factors. For some types of foreclosures there could be title problems which could be a really big deal (you can kiss some or all of that 200k good-bye). Some foreclosures you can't inspect first so it could have all sorts of problems and even if you can inspect them first they are sold as-is so you really never know what kind of problems the house could have.
Also, if the bid is 200k for a 400k house and its easily verifyable that there probable arn't any major problems with it then some investor will probably be will to bid at leat 300k and after repairs and closing costs and everything else you are looking at a more modest 40k profit, or so. Still not bad but this is really your pay for the time and effort and money you put into the deal.
- Anonymous11 months ago
You may not be able to be approved financing it depending on how much work it needs.
I bought one that needed a number of things. 15 years later, I did almost none of them. As a result, my house is not worth what many others are that were maintained better.
I paid cash.
I need a roof, a new AC unit, carpet thru out and more. I am using 2 window units and have been for many years because I did not want to shell out the thousands despite having it.
My house was under $100k.
- Anonymous11 months ago
Both my daughter and I bought foreclosed houses for about half of their appraised value. It has worked out great for both of us despite some "rehab" being necessary. We are both handy and not afraid to work on repair projects ourselves.
Expect a foreclosure house to need at least some repairs. The longer it has been on the market the worse it will be but after all, you are getting a house at a substantial discount. Banks and finance companies don't want to be in the real estate business so when they are ready to get it off their books the price can really drop! If you are worried about potential liens or big, expensive repairs, you can get a title search done and have a complete home inspection done before you buy it. Look at the deed itself so that you find any easements or clauses written in that are unacceptable. Like I said, my daughter and I both ended up with a lot more house than we could normally afford!
- StephenWeinsteinLv 711 months ago
You'd have to pay to repair whatever was wrong with the house -- and there could be a lot. And you'd have to pay for the costs of evicting anyone living in the house (even if they are there illegally).
- Steve DLv 711 months ago
The biggest danger is the shape of the house. In your scenario, that $400K appraisal might not be accurate since it was probably based on teh shape of the house prior to sale. Obviously, people know ahead of time when they are going to default so they react accordingly. There have been not infrequent horror stories about foreclosed houses having all the innards stolen even down to the copper pipes that the ex-owners ripped out to sell for scrap metal. One news story from years ago told of the ex-owners coming back minutes after the sale and taking all the outside foliage (yep, dug up bushes, yard trees etc. and took them). So all of a sudden that $200,000 you paid for that $400,000 house now costs an additional $200,000 to put back into shape so you can get a use and occupancy permit to live there. This is why many of these houses are bought by contractors, etc. who can do repairs themselves to keep costs down and then they flip them - unless you are in the construction trades, this very rarely works out for the average Joe.
- danxp2Lv 611 months ago
That because the place was not being paid for, necessary maintenance were forgotten since the previous occupants had no money. The bank was neglecting maintenance and security on the place and you have a squatter who might have legal squat rights, or at least has to be evicted, or serious problems.
In addition to buying the property, you’re also purchasing any liens (or unpaid bills relating to the property), code violations, or title issues, Niakan adds. Do your research to find out what other costs may be associated with the home, and factor all those costs into your bid.