The foreclosure process is an ordeal for the home’s former owners, but it can be advantageous for buyers looking to purchase a property at a significantly lower price.
Although there is always a chance to make some money, it’s important to remember that buying foreclosures also includes risks. In this blog post, we’ll fill you in on what kind of expectations you should have if you’re thinking about purchasing foreclosed property in Orlando, FL!
Although the number of foreclosures has decreased, they can still be found in many locations. Additionally, more people are interested in investing due to increased media coverage on channels such as HGTV. However, there are a few things you should know about foreclosure investing before getting started.
You Are Buying As-Is
Homeowners who fall into foreclosure often stop performing routine maintenance and repairs, which can cause the house to rapidly deteriorate. Unfortunately, foreclosed property can get vandalized by either the previous homeowner or others that now know it’s now empty.
Although foreclosure prices might seem appealing, it is very rare that you will be able to negotiate repairs into your purchase price. Because there is a high demand for foreclosed property, banks seldom agree to repair requests.
Always have an inspection done before considering buying any foreclosure property, and don’t let repair costs published by the bank deceive you; they are not always accurate representations of what you’ll need to pay.
Financing Can Be A Challenge
A bank is less likely to see a home with missing windows, old appliances, water-damaged flooring, and a leaky roof as a wise investment—even if the owning bank has priced the home very low.
In order to give you money, most lenders have requirements that the property must meet. Before putting in an offer on a home, you will want to get pre-approved or be prepared to pay with cash.
Some banks will give preference to cash buyers because, from the bank’s perspective, a cash buyer is certain, whereas an offer that needs to be financed is more of a risk.
There Is Competition Everywhere
Experienced investors who look into buying foreclosed property usually have the process down and are therefore able to make an offer as soon as a good deal arrives.
Being able to discern when it’s time to leave a property and also when you should make an offer on the spot is key, as any hesitation could be costly.
If you’re working with a professional, they should be able to guide you along and help put together an offer that the bank will react more favorably towards. Here at OfferCharm, we are always available to answer any questions or concerns you may have regarding foreclosures.
Costs Upfront
Although buying a foreclosure could potentially save you money in the long run, you have to be prepared to pay for repairs and maintenance upfront. A foreclosed property is likely to be ill-maintained, leaving it vulnerable to theft, vandalism, and significant repair needs.
A professional inspection is essential, but keep in mind that you will need to pay for this out of pocket. You always have the option to include a contingency clause in your offer, which would give you the ability to back out of the deal should the home not pass inspections. However, many banks are unwilling to agree to this and will pursue other more lenient offers instead.
Not to mention, if the utilities are off you will have to foot the bill for turning them back on just for inspection. It would be pretty tough to check leaky pipes if there hasn’t been any water running through them for months.
Furthermore, you’ll want to ensure the home doesn’t have any liens against it. By hiring someone to run a title search, you can save yourself money in the long term.
If you are interested in investing in a foreclosed property, please fill out this form and we will be in touch with you as soon as possible! Alternatively, feel free to give our office a call at (407) 519-9514.
