Purchasing a bank foreclosure listing may be tempting. These homes often provide excellent opportunities for property flippers and investors. Still, bank foreclosure listings have a set of issues that separate them from your typical real estate transactions. Read below for the benefit of buying a bank foreclosure listing as well as the disadvantages, disclosure issues, and fore a better standing of what it means to buy a property "as is."
The Benefit
There is one huge benefit that the buyer of a bank foreclosure listing will probably see and that is purchasing a home under market value. Most of the time, banks do not want to foreclose on a home. The process is an expensive hassle that will give them much less of a return than if the borrower had seen the loan through to term. Because of this, most lenders and banks wish to get rid of their bank foreclosure listings quickly and thus list the properties below market value for a quick sale.
The Disadvantages
The truth is, people become upset when their homes are "taken" from them by the bank and can act with emotion as opposed to logic. This is especially true if they have put much work into the property. It is not uncommon for the homeowners of foreclosed properties to take with them the things that they added to the home, even the kitchen sink! In addition, the home may be left in a state of disarray with loads of personal property left behind. The clean-up can be a hassle, but this clean-up can make a diamond in the rough.
The Disclosures
In some states, it is required that sellers prepare and provide a Residential Property Disclosure to all buyers. This often itemizes areas of the home that may have damage, such as the foundation, roof, etc. Depending on the state and the laws therein, corporately owned homes such as bank foreclosure listings may not be required to have an accompanying property disclosure. Therefore, there may be problems that you don't know about and the bank is not required to disclose them.
Understanding "As Is"
In addition to not having a disclosure at your disposal, foreclosure homes are often sold "as is," meaning, for the most part, the owner of a bank foreclosure listing is not going to make any repairs to the property. In most cases, this does not mean that you are not entitled to an inspection. Often, you have a set amount of time to have an inspection and determine whether or not you still want to purchase the home. It is important that you read and understand all of the documents involved in purchasing a foreclosure very carefully.
