Buying a home is considered a part of the American dream and a personal lifetime investment for a homeowner.
However, the reality of homeownership can be less uplifting.
Owning a home requires the homeowner to be able to afford monthly and recurring expenses like mortgage payments, insurance, repairs, and so on.
Many aspiring homeowners end up buying homes that either can’t afford upfront or won’t be able to continually pay for in the long run.
The reality is, foreclosures are a part of the American life as much as owning a home. If you are looking to buy a new home, it could be significantly cheaper for you to buy a foreclosed home.
If you don’t know what you are doing, however, you could lose a lot of money. Here are four steps to take when buying a foreclosed home.
The search
There are several methods you can use to find a foreclosed home for sale.
You can find listings of foreclosed homes near you on the official website for the U.S. Department of Housing and Urban Development.
Check the websites of your local banks. Since banks usually take over these properties for auction, they list foreclosed properties they own on their websites.
Check out the online real estate listing sites like Zillow or RealtyTrac. You can also look for foreclosures on the websites of your local newspapers.
Conduct a lien and title search
Make sure that you conduct a title search. A title search will look for records showing who owned the house in the past.
A local government may have attached a lien to the property in question. So, you may be on the hook for paying off the debts or unpaid taxes of the previous owner.
A thorough title search will also show you if there are unknown owners of the property. You don’t want a stranger turning up at the last minute to claim the property after you have paid for it.
Get an agent
You may want to hire a real estate agent or broker to help you with this process. Unless you understand the inherent legal processes of buying foreclosed properties at auction, having a real estate professional at your side is a benefit.
Get a home inspection
Contrary to popular belief, home inspections are not legally required.
Nor are foreclosed homes being sold at auctions legally required to offer up-close viewings or inspections.
If you are not allowed to view the property, then walk away from the deal. Otherwise, hire a home inspection of the property.
The seller could be hiding decades of structural issues, repair needs, and decay from you. And sometimes the cost of rehabilitation can be more than the value of the home in some cases.
