A common risk when buying a foreclosed property is paying more than the current market value of the home. Your rental plan may be delayed. Let's discuss the top 10 risks of buying a foreclosed home and the best ways to avoid them. Maintenance and condition can be an issue on foreclosed properties due to the circumstances in which the previous owner moved and the time the house may have been unoccupied.
Bank properties are sometimes disgustingly dirty due to the time they spend sitting empty, the intentional neglect of the previous owner, or the occupation by drifters. When a house is locked with no air circulation for months, accumulated dirt can cause the entire house to smell bad. Since no one at the bank has ever lived in the house, it is unlikely that they are aware of existing problems with the property. You'll have to figure it all out yourself during the home inspection, ask neighbors, or from experience after becoming an owner.
First of all, there's a big chance that you'll have to renovate or work on these homes for a long time before they're habitable. Second, because foreclosed homes can be good deals, you may have a lot of competition when you bid on a home at auction. Since the bank pays the realtor's fees, you probably won't pay more than you would have done in the foreclosure auction to outbid the bank, and you'll avoid most of the risks and unknowns of buying at the auction. The amount of risk and the potential reward of buying a foreclosed home can vary depending on which part of the foreclosure process the home is in.
Of course, there are often a lot of foreclosures in a market at any given time, but there are also many risks when buying a foreclosed home that could affect your bottom line and potentially result in losses.