Question: What are tips and risks when buying a foreclosed home or real property?
Answer: (1) Review the state foreclosure law. Know the foreclosure process. The property owner may exercise the right of redemption before the sale is finalized; (2) Research the property in order to uncover any problems with the property. The home may be in bad condition; (3) Conduct a title search on the property to check for any liens in addition to any mortgage. If the foreclosure sale is by the Homeowner Association, then there may be a mortgage on the property. (4) Check the value of the property, including finding out the last sale price and the tax assessed value; (5) Inquiry into the condition of the property and neighborhood. Find out whether the property is currently occupied. If not, how long has it been vacant? If occupied, will the current tenants vacate when the property is sold. Also, are other homes in the neighborhood in trouble (vacant, in pre-foreclosure, foreclosure or in need of repairs)?; (6) Find out whether the property is in a condominium or association. What is the status of the condominium or association? Are there any special assessments due?; and (7) Contact a real estate attorney who is familiar with working with foreclosed property. The attorney can provide an expert title search and advice on price negotiations. He/She will review legal documents and make recommendations that will protect the buyer’s interest during the sale process.