Buying a foreclosed home could be a diamond in the rough, or it could be a money pit. When a house forecloses, that means the homeowner could no longer keep up or stopped paying their monthly mortgage. The lender then seizes the property. They then put the house up for sale or in an auction in hopes of getting enough money to pay off the remaining mortgage.
This is an opportunity for the public to snatch up a house at a relatively lower price than it would typically be on the market. The problem for the buyer, the condition of the house cannot be guaranteed which could cost you more money in the long run.
So if you are browsing through foreclosures, like on Queens foreclosures, here are a few steps to consider taking.
1. Get a Home Inspection
Getting a home inspection should be at the top of your list. This is a professional that comes in and evaluates the structure of the house, as well as any other major components that make up the home.
The home inspector can give you a snapshot of the condition of the property. It could tell you that the house is in excellent condition with minimal repairs needed. Or, it could give you a never-ending list of repairs that could lead you to walking away from the deal.
2. Find the House History
The hard part of buying a foreclosure is that you are not buying from the previous homeowner. That means you can’t ask them specific questions about the history of the house to tell if it needs any upgrading or not. Many investors also leverage buying the house when it’s in a state of pre-foreclosure. Read more about that here.
Getting the home inspection can help you with understanding the history of the structural portion of the home. But you may also need to search out through property records to find more information on the house.
3. Check the Plumbing and Electrical
Lots of times a foreclosed house hasn’t had anyone inside for a long time, especially if the home was abandoned by the previous owner. You could walk into a house that has mold growing from broken pipes and light switches that don’t work.
Make sure your home inspection includes checking things like the plumbing, electrical and ventilation system. You wouldn’t want to be caught off guard in the winter when the heat doesn’t work. Or to find a little critter crawling around in the vents.
4. Change the Locks
Changing the locks on the house of a foreclosure may be an obvious step, but it is one that should not be skipped. You cannot guarantee keys aren’t floating around with the previous owner, especially if the home was abandoned. On top of that, these types of houses have a master key that many people may hold, including contractors, brokers and appraisers.
5. Don’t Forget Home Insurance
When buying a foreclosure, one of your first steps prior to purchase should be to line up your home insurance options. This will ensure the safety of your investment in the property as soon as the purchase closes. No matter the condition of the property or your intentions, insurance will minimize the risk and, in some cases, may even be a mandatory requirement of your lender if financing is involved.
There are a lot of steps to take when buying a foreclosure. These are a few of the important ones to remember. Going down this path could get you the house of your dreams if done properly.