Cautions for Homebuyers Considering Foreclosed Homes

First Time Buyers Really Need an Education

There is much to consider before making a foreclosure purchase for a buyer's first home. An experienced homeowner may better understand and manage the obstacles that come with buying a foreclosed home. Previous homeownership provides an education and valuable lessons in the true cost (time and money) of owning a home, beyond the monthly mortgage payment.

1. A foreclosed house may be loaded with surprise expenses
   • Often in disrepair
   • Can have titles encumbered by judgments, liens, and other attachments
   • The homework necessary to research the market and property can cost them even before they begin to negotiate.
2. Some source of liquid cash to tap, along with low debt and outstanding credit, is essential.
3. The buyer may need assistance from a real estate agent, attorney, investor, or another professional familiar with local real estate law, specifically as applied to your market's foreclosure system.

Even Experienced Buyers Should be Aware of These Pitfalls When Buying a Foreclosed Home

• If someone has been unable to pay their mortgage for several months, chances are they also haven't been able to afford upkeep.
• The house will likely sell "as is" and may need costly maintenance and repairs.
• The home may have been vacant for some time; it is not unusual to find missing appliances, toilets, sinks and even electrical wiring and plumbing.
• The title could be tagged with judgments for an unpaid second mortgage or home improvement loan, and could include late fees and other fines.