by Lisa Orme

Created on: August 06, 2008

How to Buy Foreclosures

Climbing numbers of foreclosures are an unfortunate fact of life in the current economy. Unfortunately, that is, for the millions of people in financial jeopardy, but a unique opportunity for those who are properly positioned financially and are not afraid to exercise their "risk muscle".

RISKY BUSINESS
Purchasing foreclosures is clearly not for everyone. Many people will see and understand the opportunity; but not everyone who sees the opportunity is able to take advantage of it. And of those who are able, not every one should. There are many risks, and some people are just not in position to accept them.

There are important considerations for anyone considering entering the arena of buying a foreclosure property.

THE GREAT UNKNOWN
First of all, be aware that you are buying the unknown. And you are buying it "as-is". Most of the time, these houses need work. It takes a long time to go through the foreclosure process, and that means the previous homeowner had a long period of financial difficulty. People under long-standing financial stress often defer a lot of maintenance items. While many things may be quite evident to anyone looking; like peeling paint, falling gutters, or a really bad roof; many other things are less obvious.

Recognizing a bad furnace in the middle of July may require an expert. And a basement that is habitually wet in the spring may be quite dry in September. Not to mention the various types of insects which can damage a home. It's just not always so easy to see defects which can lead to expensive fixes. Surely there are some visible signs of many problems, but other things are much less obvious. At any rate, expect to find something unexpected, no matter how much you think you'll be able to see on your own.

HIDDEN PROBLEMS
Often foreclosure homes will allow you an opportunity to inspect them before the actual sale. Well, "inspect" is probably overstating it a bit. They will let you look at them. But if the property is in an auction situation, it is often only a couple of hours before the auction starts. This limits your investigation time and makes it even more important to bring and experienced or trained eye to look the property over. And sometimes the property is still occupied. If so, this brings another series of things to beware.

OCCUPIED PROPERTIES
Occupied foreclosure properties mean that you probably won't get to see the property interior. That's a risk in itself. If you opt to accept that risk, you'll have the

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