While every home purchase requires due diligence on the part of buyers, buying a distressed property - a foreclosure or Short Sale - raises that requirement to a much higher level. I am a Broker/Manager with RE/MAX 4000 in Grand Junction, Colo. and hold the Certified Distressed Property Expert (CDPE) designation, emblematic of special training in working with buyers and sellers of distressed properties, Contact Me for assistance with purchasing a foreclosure or short sale.
In addition to the usual precautions a buyer should take - such as becoming familiar with the area, looking into neighborhood schools and transportation, having the property inspected and feeling comfortable in the home - additional factors come into play with a distressed property.
First, you must be certain there are no problems with the title.
Make sure you're getting a clear title, this hasn't necessarily been taken care of in a foreclosure. Together with your real estate agent, you should thoroughly study the title documentation to make sure there are no easement issues and all liens have been released.
If you have any questions at all, talk to the person who did the title research to make sure you're not going to have unpleasant surprises down the road.
The main advantage to buying a distressed property is price. Traditionally, buyers have been able to get good deals, especially on bank-owned properties. And this can still be the case, though lenders have become less willing to accept extremely low offers. But sometimes a low price can come with hidden costs - in the form of repairs and maintenance that may have been delayed.
You may be getting a better price," Tripoli says, "but what if you have to replace the sprinkler system or perform major repairs? That leads to the necessity of having the property inspected. A foreclosure may have been vacant for many months, and may have gone through a winter with the utilities turned off. Broken pipes, a leaky roof and other potentially costly problems are a real possibility.
You may need more than one inspection: a regular property inspection and one by an engineer, make sure the utilities are turned on during the inspection. You need to be incredibly well-informed as to the property's condition, because 99 percent of the time the banks sell the property as-is. And they're very serious about that.
Another virtue buyers should have is patience, especially with a Short Sale, You're trading frustration for a little better price.
And don't limit your home search, What you need to do is get in touch with a real estate agent who'll make sure you see everything that matches your interests, Contact Me I am a Certified Distressed Property Expert (CDPE)