A foreclosed home may seem like a steal because of the low sales price, but the sales price is only part of the picture. Buying a foreclosed home comes with an incredible amount of risk, once you move into a foreclosed home and discover hidden defects there is no recourse and no one you can turn to.
Before buying a foreclosed home you may want to think about whether the risks are worth the reward.
You are Buying the Home As Is
When you buy a foreclosed home you assume all of the risk. Buying a new or resale home requires full disclosure on details and drawbacks on the property, so the seller is liable. There is no requirement on disclosures with a foreclosed home. This opens you up to liability and the need to spend considerable amounts of money on repairs.
Foreclosed homes don’t come with any kind of warranty and are often not available for inspection prior to purchase. This means that you will have to foot the bill for any repairs that need to be made. When you buy a home at Mesquite Hills, the home is covered by our 2 year warranty on workmanship and materials and 10 year structural warranty. When you buy a new home you will have the peace of mind knowing there won’t be any unanticipated out of pocket expenses.
Financing options for foreclosed home are often limited and there can be substantial costs that you are required to pay at closing. Foreclosures are often behind on taxes, HOA fees etc. leaving you to bring in that cash at closing. When you buy a new home, builders often offer incentives that you can use towards closing costs that minimize or eliminate closing costs altogether.
You’re on Someone Else’s Schedule
If you want a quick response to your offer, a new home is your best option. You deal directly with the builder which ensures that you will get a quick reply. And when it comes to closing, with a foreclosed home the bank doesn’t care about your schedule and has no problem moving up or delaying your dates.
Are the Risks Worth It?
It is a great time to be a homeowner, prices are low, interest rates are attractive, and the selection of new homes is unprecedented. Although the price of a foreclosure can seem irresistible you may want to consider whether, for an investment as significant as a home purchase, the risks are really worth the reward.