Buying Foreclosed Homes: Deal or No Deal?

April 30, 2009
Author: RISMEDIA

“The foreclosure plan will help some, but it will not rescue everyone,” said Kathleen Kuhn, president of HouseMaster. “Many will lose their properties to foreclosure, which presents a unique opportunity, especially for first-time homebuyers.”

While HouseMaster notes that there are many great deals to be had in the current environment, it is important to note that proper preparation is key to successfully navigating the foreclosure market. Working through the intricate foreclosure market will be less difficult for consumers that properly prepare for the process.

“Properties in different stages of foreclosure represent opportunity but also danger for the unassuming buyer,” added Kuhn. “While lower asking prices draw potential buyers to these homes, each property has its own challenges that can come from abuse, neglect or deferred maintenance on the part of the previous owner. Consumers must do their homework to help them know whether a property is truly a ‘good deal.’”

Some of the country’s hardest hit real estate markets such as Fort Myers, Fla., Phoenix, San Diego, and Las Vegas are becoming the hottest foreclosure sales markets. In fact, 60% of HouseMaster’s inspections done in these markets are for homebuyers purchasing foreclosed properties.

Not all foreclosures are great buys, however, and if consumers are not fully educated on the property or the process, they could potentially make poor investment decisions. “Buyers must take proper precautions to ensure they are making informed real estate decisions, and are aware of property conditions that can greatly affect the home’s long-term value,” Kuhn added.

A home inspection by a qualified home inspector can provide buyers with a comprehensive education on the home they are considering. Education is the key when buying a foreclosed property as it helps the buyer understand their options allowing them to get the best house for reduced costs and helps to avoid making potentially devastating financial mistakes.

According to a recent study conducted by HouseMaster, there are five main physical conditions that are typically found in a foreclosed property. They are: Moisture-related problems; defective gaskets, valves and hoses that are leaking or have the potential to cause destruction; vandalism, especially if the property has been vacant; insect and rodent infestations and blocked or damaged waste and sewer lines.

“Now is a great time to buy a home, especially for first-time buyers,” adds Kuhn. “But, if buyers are considering properties in various stages of foreclosure, property inspections are very critical in making the right investment and avoiding costly headaches down the road.”