What are the problems buying foreclosures?
It goes without saying that everyone who is in the market for a prime piece of Sarasota FL real estate wants to find a bargain. But the big question is: are there any real bargains out there? There is only so much real estate available, and it would be shocking for someone to sell it for less than it is actually worth.
Unfortunately, this is pretty much the way it is. The real estate business is a pretty well refined machine that has ironclad methods of appraising, selling and buying land. Finding a perfect parcel or a beautiful Sarasota home that is actually priced below value is almost impossible.
Or is it?
Say hello to the foreclosure sale. What is a foreclosure sale? They are essentially bank sales that are selling homes that have been foreclosed on back to the public. They are the single greatest source of home values anywhere. But they are far from a no-strings-attached affair. There are many catches to the foreclosure racket so before you spend your hard earned money on a foreclosed property, make sure you take these points into consideration.
Almost all foreclosures, with a rare, rare exception, are cash-only purchases. This fact eliminates 99 percent of possible buyers since most of us don’t have a few hundred grand lying around in which to buy a home. You can’t get financing of any kind from a bank to buy a foreclosure, which is a shame because it would open up the possibility of a legitimate real estate bargain to the vast majority of people who could really use it.
You need to have a complete title check for the home. For those that might be new to the home buying process, the title of the home is an official document that says that you are the rightful, legal owner of that home and that there is no one anywhere that can file a claim in court saying that they are the real owners. Every home comes with one and in most cases, they are simply a type of insurance policy against any unscrupulous folks that might try to file a bogus court order saying that they are the real homeowners. In the case of a foreclosure, however, the current status of the home might be a little fuzzy.
The reason why a home was foreclosed on, in most cases, is simply the fact that the bank didn’t get their mortgage payments. Most foreclosures are family homes where circumstances and life interfered and the family lost their home. There wouldn’t ever be any sort of title problems in these cases since it would have been thoroughly checked during the last time that home changed hands.
But other times, the home could have been a house of ill-repute. There could have been major crimes committed there, or it could have been a home that was seized because drugs were being dealt out of it. Homes that were seized by the police and then sold off during a foreclosure sale are extremely dangerous to buy because there is a chance that the original owner could have been killed by the criminal element that ended up taking over the house and once a body is recovered and a will is executed, you might find out that the home actually belongs to someone else. You could actually be throwing your money down the drain.
This is why a full and professional checkup on the title of the home is absolutely vital when you are thinking about buying a foreclosed home.
Finally, depending on the time frame in which the home is to be sold, you might not have a chance to properly check out the house before the sale date happens. We’re talking no inspection, no appraisal, no walk through to see if the walls are falling down inside. You literally buy it site unseen. To say this is risky is the understatement of the century.
Unless you have money to burn and some reliable inside information, it’s probably a good idea to stay away from foreclosure auctions. They are extremely tempting due to the fact they are usually priced far under what the asking price would be if it was being sold like a normal house, but it is truly buyer beware.
