Purchasing a foreclosure can be a great opportunity to get a good price on a home. Some people like to purchase foreclosed homes as an investment to flip and resell or to turn into a rental property, whereas others hope to find a well-priced foreclosure as a way to break into the real estate market as first-time home buyers. Whatever your motivation for buying a foreclosure, you should first be aware of the risks that come with this type of home purchase. Although they can be a good deal, foreclosures are riskier than buying a regular home and they come with some complexities that an experienced foreclosure Realtor® can help you with. Here are the 3 main risks of purchasing a foreclosure.
Foreclosure Risks
- Vacancy Is Not Guaranteed
Depending on the type of foreclosure, the current owners are allowed to live in the property until it sells. This can mean that the occupants could cause damage to the property or take appliances with them and these changes to the home won’t be covered by your contract. - Foreclosures Are Sold As Is
When purchasing a foreclosure, they are sold as is, even if major problems are discovered. Once an offer is made, there are no changes to the contract. To help mitigate this, you should view the property in person (if you are able to) and search for any red flags that signal larger problems that will cost money to repair. If you don’t see any issues that turn you away or if you are unable to see the home yourself, you should have a home inspection before your purchase a foreclosure. If you don’t purchase the foreclosure this can seem like an unnecessary expense, but it’s much better to spend the money on a home inspection than to purchase the home and learn about a major problem later. Keep in mind that foreclosures often have limited times available to view the property, making it more difficult for you to see the house in person. - Complex Paperwork
All home purchases come with paperwork and certain legal conditions that must be adhered to, but a foreclosure is even more complex than the average home purchase. Even before the foreclosed property is ready for purchase, the foreclosure process is lengthy, costly, and requires court intervention. When purchasing a foreclosure, you are dealing with the bank as opposed to a seller, and this can make purchasing, as well as bidding, more complex and slower. The best way to ensure all paperwork is completed properly and thoroughly and that all foreclosure laws are followed is to partner with a Realtor® who has a thorough understanding of foreclosures and an abundance of experience closing on these types of home purchases.
Mitigate Foreclosure Risk By Partnering With A Calgary Realtor®
Buyers need to be cautious of any potential risks associated with the foreclosed property by partnering with someone who understands foreclosure proceedings. Purchasing a foreclosure can be difficult to navigate even for some experienced Realtors®. Trying to navigate a foreclosure on your own can be nearly impossible and can lead to important aspects of foreclosure purchasing being missed. Feel confident in your foreclosure dealings and contract by partnering with a Calgary Realtor® who is highly experienced in foreclosures. The Mel Star team has helped Calgarians purchase thousands of foreclosures and are the leading foreclosure Realtors® in Calgary. To partner with experienced and reputable Calgary Realtors® who know the intricacies of Calgary foreclosures, speak with the Mel Star team at 1-403-861-9944 or fill out the online contact form.
FAQ
Yes, you can. However, banks may find all-cash offers more attractive.
The bank wishes to sell the property as fast as it can to recuperate the lost money from the missed mortgage payments by the previous homeowner. This is often why foreclosure properties are listed for lower prices than other houses on the market to attract buyers. That being said, this price can be influenced greatly by the Calgary housing market.
A pre-foreclosure home has not yet been foreclosed, but it is going to be. If you are purchasing a pre-foreclosure home, you will be buying it from the homeowner instead of from the bank. These properties can often be very affordable, as the seller has a short time frame to sell the house. Ask one of our Calgary Realtors® about the different options of bank foreclosures versus pre-foreclosure homes for more information and the pros and cons of each.
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