Foreclosed houses are everywhere you turn in this market. But while their sticker prices are low, buying one can be a risky endeavor. This is mainly because you won’t have the same protections as you would for a conventional house.
From Consumer Reports magazine, here are four ways you can protect yourself if you’re in the market for a foreclosed home:
1. Don’t pay a fee for property listings. You can find free information on foreclosed homes in your area by checking with a local agent. Usually there will be someone who specializes in foreclosed properties at the broker’s office. This person is a great free resource.
2. Invest in a home inspection. This is always a good idea whenever you buy a house, but for a foreclosed property it is especially the case. The property may have been vandalized. Fixtures and appliances may be missing. Also, with utilities shut off it will be impossible to test for the water pressure in the shower. Try to arrange for the utilities to be turned on before you buy. The inspection will cost between $250 and $400, but it will end up saving you if there is a problem with the home’s structure or its systems.
3. Don’t assume the sale is final. In some states, a homeowner may have up to 180 days after the foreclosure to pay any outstanding debts and reclaim the home, even if someone else has bought it.
4. Buy some title insurance. The title insurance will protect you against any liens that you might not know about. It will also prevent a previous owner from making a successful claim on the house after you buy it.
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