10 Things to Know Before Buying a Foreclosed Home
Buying a foreclosed home seems like a great way to get a good deal on a house, but be cautious. Foreclosed homes that have been abandoned or neglected for a long period of time usually come with unseen costs that can turn that bargain into a money pit. Take a look at the best steps to take if you’re in the market for a foreclosed home.
Invest in a Home Inspection
Get to know the property before you make a huge purchase on the home. You can have a home inspector provide a thorough assessment of the structural, mechanical, and other major components of the home. Once you get a better picture of the home’s condition, you can begin thinking of plans for repairs or, simply walk away if the house seems to be more trouble than it’s worth.
Learn About the Home’s History
There’s such thing as a Seller’s Property Disclosure Statement which discloses the history of the home’s maintenance, repairs, and additions. But, when the bank owns a property due to a foreclosure, there will be no SPDS. This makes a thorough home inspection especially crucial, because it may be the only way to find out about changes made to the property over its life.
De-Winterize
If you’re looking at a home that has been unoccupied for several months, you should ask whether the utilities are switched off. It’s common to drain the pipes to prevent freezing, but you should pressure-check and energize everything prior to a home inspection. Check with your real estate agent for referrals because each municipality has its own rules about these details.
Identify Plumbing Problems
The most serious problems in foreclosed homes are usually from broken plumbing pipes or leaks. Check faucets for water pressure, inspect the ceilings and baseboards for water stains, and look for signs of mold and mildew, which can be signs of plumbing problems.
Examine HVAC Systems
Dust and debris accumulation in the ductwork, boilers and furnaces of an abandoned home is bad news. They can deteriorate under humid conditions. You should clean and repair broken or damaged parts before you can test the operation of appliances.
Look for Signs of Deferred Maintenance
Some homeowners stop taking care of their homes and leaving the eventual buyers with lots of maintenance issues to address, including gutters that need cleaning to overgrown vegetation that needs pruning. Look out for cheap repairs with indication of cutting corners, such as duct tape patched over leaky pipes or electrical wiring. This can lead to water damage, mold, or fires, and may require costly repairs down the line.
Check for Expensive Repairs
Be prepared to find big-ticket repairs. Bad roofs or foundation cracks can ruin a home, and damage to other outdoor structures can cost thousands of dollars to fix.
Perform a Sewer Scope
If you’re looking at a home more than 20 years old, you should get a sewer inspection to help prevent problems down the line. Common sewer issues include tree roots growing into the line, or lines that are rotted, clogged, or broken. Have a plumbing company check it out by snaking a video camera through the line to conclude its condition.
Resolve Any Liens
Many municipalities regulate the maintenance of a property after a foreclosure. If the bank isn’t keeping up on tasks such as mowing the lawn, there may be a lien placed on the property. This may also result from unpaid contractor fees or utility bills. Double-check that all liens are investigated and resolved by you and a title officer.
Rekey All the Locks
Once you’ve chosen a home, you should immediately install new locks before moving in. Many houses are on a master key system which means that multiple brokers, contractors, appraisers, and other people could have the key.