The Hidden Costs of Buying a Foreclosure

by Maryann Ross Levanti 10/04/2020

Image by Steve Heap from Shutterstock

An active housing market has reduced the number of foreclosed homes in inventory, but there will always be foreclosed homes available to purchase. Many buyers are not aware of what to expect when purchasing a foreclosure. Here are some home truths about buying a distressed home.

You’re not always getting a deal.

Many buyers believe foreclosed homes sell at rock-bottom prices. They expect massive and unrealistic discounts. While the bank may be willing to sell for well below the fair market value, their goal is to recover the loss they incurred when providing the original mortgage. Additionally, foreclosed properties may have long-standing maintenance issues that require a substantial investment to remedy.

The bank may not have the only lien.

A foreclosure removes the primary mortgage debt, but a distressed property may have other claims for money owed in back taxes, for mechanical work and contractors’ fees. A complete title search should tell you if there are liens that need satisfaction when you purchase a property. Your real estate agent can guide you in how to discover unsatisfied liens or judgments against the property

You may find maintenance problems.

Most owners do not simply move out of the property when they can no longer afford to make payments. When an original owner loses income, maintenance often becomes a low priority. And, if they have a medical disaster, a decline in health often means a decline in care for the property. Storm damage, pests, and other hidden issues mean damage to a home that gets overlooked when the owner has different priorities.

You may find vandal activity.

Although there are some stories of angry owners vandalizing the foreclosed property that they invested their life savings into, more often are issues with opportunistic thieves. They remove plumbing and light fixtures, paver stones, and other readily accessible objects from an abandoned property.

Schedule a thorough inspection before you purchase if possible so that you know what you're getting. Your real estate professional specializing in distressed properties can connect you with an unbiased inspector. They will report on your potential new home and help you uncover any hidden costs lurking there.

About the Author
Author

Maryann Ross Levanti

I'm Maryann Ross Levanti, looking forward to meeting you and helping you find your new home and/or sell your current one. I've lived in Fairfield County the majority of my life - grew up in Westport, (Coleytown, Coleytown, Staples), undergrad at UPenn, masters from Edinburgh, Scotland. I'm ABR and GRI certified, and hold a broker's license in real estate, as well as a provisional appraiser license. Additionally, I am the exclusive agent for CCO Habitats - a HOBI award winning building company which regularly offers new construction homes as well as renovated homes to the market in Westport. In my 20 plus years of selling homes, I've learned many things - among them - the customer is not always right. Nor am I. However, if we work together we have a much better chance of being correct and either getting your home sold or finding the home that best suits your needs. Yes, I'm outspoken and opinionated. But anyone with a license can open a door - wouldn't you rather have doors opened by someone who actually tells you the truth and is willing to put her years of experience and knowledge into working 24/7 for you to help you understand what you're getting into? You may not always like what you hear, and there are no crystal balls in this business. But I believe an informed decision is always better. Hopefully you do too! As a yearly winner of the Connecticut Five Star Realtor award and frequently repeated recipient of customer service awards indicate; my priority is you, my client, and my clients appreciate it. Put my local knowledge, professional skills, ethics and dedication to work for you - give me a call 203.984.5157.