What to Know Before Buying a Foreclosed Home – Irvine Real Estate – Irvine Homes for Sale

by Robert Mack on February 9, 2011

in Buyers, Latest News

Foreclosures are advertised as hyper property bargains. This is why potential home buyers and especially property investors frequently consider them. On the other hand, some people shy away from it, because it represents a major part of people’s misfortunes. Nonetheless, if you should ever decide to look at buying a foreclosed home, here are some important details you need to establish.

  1. Know if there are any liens and encumbrances on the property. Liens and encumbrances are legal claims to a home by virtue or any outstanding obligations like unpaid contracts, tax defaults and mortgages. Do a title search to know. To have the ownership transferred to you, you would need to settle all outstanding obligations on the property.
  2. Know the extent of maintenance, repairs or restoration work that needs to be done and put that budget in as well. Foreclosure homes are sold “as is”. And for people who lose their homes to foreclosure, they most likely ran out of funds to maintain the upkeep of their house. They also have the propensity to vent their ill feelings and vandalize the homes they are about to leave behind. Look at the plumbing, electrical, roofing, insulation, walls and other details. Look for leaks, drippings, and items that may need to be put in order before the homes become inhabitable. Consider your estimate of the repairs to restore the house in addition to the cost of gaining ownership.
  3. Know the equity built up into the property. The longer the previous owner actually lived in the property that higher the equity built into the property. The higher the equity built in, the lesser the amount that the current lender has to cover thereby driving the price of the property farther from the appraised value. Therefore, the better the bargain it becomes.
  4. Know the applicable redemption rights of the original property owner. It varies according to state, you need to know because even if you have made initial payments, if the original owner exercises his redemption rights, you may end up losing. Do note that some states have redemption periods whereby the original homeowner can buy back the property by paying whatever money he or she still owed. If you are an investor, in the pre-foreclosure proceedings, you can purchase the right of redemption from a homeowner directly, leaving you covered and in control. To give you an idea, here are some of the states and their periods of redemption. There is a one year period for Alabama, Alaska, Arkansas, California, Idaho, Kansas, Missouri, Wisconsin and Kentucky. It is six month period for Minnesota and Oregon. It is a 30-day period or more for Michigan, Mississippi, New Mexico, South Dakota and Wyoming. Tennessee has a period of two years, unless waived at the sale of the property. The redemption periods in Connecticut are based on court decrees. Iowa has a 20-day redemption period. Illinois and Maine have 3 month periods. It is in your best interest to verify whether these are still in effect.

Investors who flip properties normally look at foreclosure as very good bargains. If you are looking at foreclosures, it is best to get professional advice so that you know exactly what your options are, and what the actual economic costs are. Do not be afraid to ask your real estate agent and make sure they clearly explain their answers enough for you to understand.

This is a great post! Foreclosures are out in full force in Irvine, and the 4 points mentioned in this article are very valid! When you work with the Mack Team, we have you covered to make sure that what you are buying is the right home for you and won’t be filled with future headaches and problems. To search all foreclosed homes in Irvine Orange County, go to http://www.IrvineRealEstateLink.com – click on the search for homes link! Its free!

Posted on Irvine Orange County Real Estate Market News

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Post by Robert Mack

Robert has written 727 articles.

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