Wednesday, February 2, 2011

Many potential foreclosure buyers don't know the problems in buying foreclosures

I have several clients who believe they need to buy a foreclosure because of the price. What they don't realize is some of those foreclosure programs don't allow you to adequately inspect the house before closing. If you purchase a Hud foreclosure you are not allowed to even have the water turned on(to check for leaks) prior to closing.

What Hud does is pay a contractor to bring out a compressor and pressurize the water system and somehow know if there is a water leak. This may or may not reveal a leak but you are supposed to take their word for it and there really is no recourse if you close and there are problems. You cannot purchase a Hud foreclosure and finance it with a regular FHA loan because of not being able to turn on all utilities. Also, how are you going to know if there is a cracked gas chamber in the central heat system? I am advising my clients to think very carefully before buying a foreclosure unless the program the foreclosure is in allows full home inspections.

The main reason people are wanting these foreclosures is because of the lower price. What many people don't realize however, is these foreclosures are driving down the prices for the homes on the market not in foreclosure. During these turbulent times of foreclosures, you can get fantastic deals on non foreclosed homes because of the current appraised values being lower.

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