By Emily Kittle
Buying a foreclosed home can be a good investment. But it also can turn into a money pit.
Before making an offer on a foreclosed property, it's important that the buyer knows what to expect.
Ryan Anglese, a Realtor with Ruhl and Ruhl Realtors in Dubuque, and Jeann Digman, vice president of mortgage lending at Dupaco, offer this advice:
- Know yourself. Are you willing to commit the time, money and effort to get the home into a livable condition?
- Be patient. When buying a traditional owner-occupied home, it typically takes 30 to 45 days to close. But it can take anywhere from two to eight months to close on a foreclosed property because of all of the extra paperwork and time involved with obtaining a clear title.
- Pay less. Usually, you will pay less for a foreclosed home. Nationally, foreclosed properties are sold for 78 percent of the market value.
- Buyer beware. The lender that owns the property has never lived there, so the true condition of the house can be tough to gage. You don't know ahead of time, for instance, whether the basement leaks every time it rains.
- Get professional assessments. Foreclosed properties are usually sold "as is." When you walk through the home, bring somebody with you who can offer a professional opinion regarding what it might take to make the house livable. Pay for a home inspection, and also consider radon and termite inspections.
- Communicate with your lender. Have a clear communication channel with your lender, and make them aware of the condition of the property so everyone is on the same page.