what are the risks of buying a foreclosed house with cash?

Asked by Mike Humphrey, Arizona Thu Oct 18, 2012

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Ric Mills, Agent, Oro Valley, AZ
Mon Nov 12, 2012
From experience. They will shorten the inspection time to 5 to 7 days and there will be no appraisal or appraiser inspections. They will also want you to close in shorter time frames. Since they are basically an "As-Is" purchase you have to be very sure you want the home as there are very limited ways to end the contract. The Bank will also use their contract and it has very little recourse for the buyer as it is written to protect the seller. What ever you do, use the services of a full time Realtor that has experience in REO's and Foreclosures. However, being a cash buyer puts your offer at the head of the class if there are multiple offers. Cash is still KING. Let me know if I can help more, Ric Mills 520-548-8940 ric925az@gamil.com
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Lexa R. Mont…, Agent, Green Valley, AZ
Fri Oct 26, 2012
The risks come in the perceptions. I have seen some cash buyers that have chosen not do the proper inspections or purchase an appraisal because they are not being required by a lender to purchase these items. Cash buyers who do not do their homework are often stuck with an undesirable property and no way to recoup their investment. Other risks include investing all that money into the housing market. Talk with your trusted financial adviser about the risks and returns on investing into property (even if you intend to live in the property) versus investing in other forms of investments.

Cash will help in some instances of negotiations when the property may be bank owned or in the short-sale process, but it is always wise to look at all issues of the situation before jumping in.
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Carmen Brode…, Agent, Scottsdale, AZ
Thu Oct 18, 2012
There wouldn't be anymore risk than if you were financing. Cash will most likely give you an advantage in the negotiations, especially if there are multiple offers.
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