By Marc Shaw
When buying a home, every buyer wants to find the best property at the best price. Unfortunately, with the real estate market still riding the highs of the pandemic seller’s market, it can be difficult to get a good price on the property you want. For buyers looking for an affordable property, foreclosures could be one option that allows them to get “more house” for their money.
While there’s nothing wrong with looking at foreclosed properties, it comes with some inherent risks that you wouldn’t find in a traditional sale. If you’re thinking about buying a foreclosed property, the team at World Wide Land Transfer has a few things you should watch out for:
Quite often, foreclosed homes have been abandoned for some time. If that’s the case, there could be costly maintenance issues to deal with when you take ownership. For example, the landscaping could be growing out of control. Untended trees may have fallen down, causing damage. If the home hasn’t been occupied and hasn’t had power or heat in months, the pipes may have frozen and burst. Issues like these can cost thousands of dollars to fix, so be sure to factor those expenses into your buying price.
If there’s a cheap foreclosed property on the market or up for auction, chances are you won’t be the only one who has your eye on it. Other buyers may make higher offers than you are willing to pay. If the property is being sold at auction, you could get drawn into a bidding war that drives the price up more than you are willing to pay. When buying a foreclosed property, keep your budget in mind and don’t exceed it, or else that great real estate deal could cost you more than it’s worth.
When homes are foreclosed upon, it’s often because the previous owner didn’t pay their mortgage or because they were behind on taxes. When that happens, there could be a lien attached to the property. In most cases, you will be responsible for paying any liens on the property before the sale can go through. Even if any outstanding liens have been taken care of, other liens could arise or be discovered in the future. Several types of liens can survive a foreclosure, so you should be aware of that any time you are looking at a foreclosed property.
In a foreclosure, the owners are forced to vacate the property, and they may not be happy about it. As the home is sold or auctioned, they could fight in court to regain their ownership rights. Once you buy the property, you will be the one they are fighting against. In addition, if the property is listed as collateral on any unpaid loans, the holders of those loans may have a legal claim to take possession of the property and sell it. In either case, you will need to hire a lawyer, and, depending on how the courts rule, you may be responsible for paying certain expenses to the previous owner or to a lender.
As we said, there could be outstanding liens or competing claims of ownership that come along with buying a foreclosed property. That’s why buying owner’s title insurance is crucial when buying a home that has been foreclosed upon. Title insurance protects against defects that originated in the past, and that would include certain claims against the previous owners that caused the foreclosure. Title insurance can also help you pay for your court costs and judgments if a lender, a previous owner, or one of their heirs comes forward and makes a competing claim of ownership.
Buying a foreclosed property can be a great way to get a deal as long as you know the risks that come with it. Purchasing a strong owner’s title insurance policy can protect you from many of those risks, so be sure to speak to a title agent as early in the process as possible. Not only can an experienced title agent identify any existing title defects, but they can also sell you a title policy to protect you for the entire time you own the property.
Get in touch with our team today if you need to find title insurance in Orlando, FL, and other communities across the country. Our more than 20 years of experience make us highly qualified to assist you as a buyer, seller, lender, or real estate agent in any real estate transaction, including foreclosures.
World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.
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