Question Details

Joe, Home Buyer in New York

What are the disadvantages of buying a forclosure?

Asked by Joe, New York Thu Jan 17, 2013

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Generally, foreclosures are sold "as is". It's imperative that you have an excellent inspector view the property. In addition, it is often the case that some hurt or embittered owners who have lost their home often pull out appliances, fixtures, etc. Make sure you have an attorney familiar with the foreclosure sale process, that title is carefully checked and there are no liens against the property. With the proper professionals in your corner, a foreclosure can be a good home purchase.
0 votes Thank Flag Link Thu Jan 24, 2013
know some history of property . usually alot of work .have a plan for property
0 votes Thank Flag Link Thu Jan 24, 2013
With a foreclosure, question everything. How many years has it been since routine maintenance was done? Does it have pest problems (in Florida it will - termites, rats, roaches and/or lizards)? Will you have problems turning services back on (because the prior owners failed to pay electricity, water, cable, etc.)? Could you have future problems with the title? In exchange for buying the banks problems, you should be getting a cheap house. If you're not getting it cheap - look elsewhere.
0 votes Thank Flag Link Thu Jan 17, 2013
I would have to say the number one concern with buying a foreclosure is the uncertainty of how long the home was left vacant and unattended, The fact of the matter is that abandoned homes with out heat and electricity and supported maintenance can lead to a multitude of unwanted problems.

This is why a good home inspection program is so essential with these purchases. Inspections should minimize the chance for problems but certainly can not be trusted to eliminate them. The rule of thumb for making these types of purchases is: inspect, inspect, inspect and them inspect some more!

Good luck,

0 votes Thank Flag Link Thu Jan 17, 2013
Hi Joe

Besides the many fine answers below keep in mind that the history associated with a home
such as upgrades, any corrective work done is unavailable, as the Seller is a Bank and has not lived in the property.

Furthermore, in 10% of the cases, the property is stripped of plumbing, heating, fixtures, stoves.

Generally a Bank does not lend if a Stove or Home Heater is not available.

Best regards
Web Reference:
0 votes Thank Flag Link Thu Jan 17, 2013
I like Cindy's answer. Along with the as-is a bank owned home (you called it a foreclosure) usually has their own crazy sales contract and this contract, they will require you to sign, protects the bank more so than the buyer. Many agents are very use to their accepted sales contracts they use, but they may not be as familiar with a banks contract which will put more restrictions and shorter time periods on things like inspections and fees. Be cautious and make sure you have an experienced agent on your side.
0 votes Thank Flag Link Thu Jan 17, 2013
The biggest disadvanate os often found by someone who did not use a buyer agent who was well experienced to guide them through the process. Bank owmed homes are sold as is, so you need to look at everything before making an offer. You can get a great deal if done right
0 votes Thank Flag Link Thu Jan 17, 2013
Good answer, Cindy. You will be buying more of a "pig in a poke" and the need for due diligence is greater. The purchase contract will be slanted as much as possible (ie - legal) in the seller's favor and you will have to live with that - or not buy. You may not get a warranty deed: be sure your attorney is comfortable with the deed they will be giving you. If everything done on the foreclosure was not exactly correct, you may have little recourse and end up with a less than clear title.
0 votes Thank Flag Link Thu Jan 17, 2013
The buyer should always be well aware that when purchasing a foreclosure, which can be a good deal, but it is sold AS-IS! The bank has its own addendum's you will want to make sure you review over thoroughly. The bank may also request to use there choice of title company and not pay title/escrow fees if the buyer chooses the title company.
I always recommend you hire a good inspector this way you know what repairs are necessary and decide to proceed or cancel and request earnest money be returned.
0 votes Thank Flag Link Thu Jan 17, 2013
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