The Ugly Truth About Foreclosed Homes

For anyone who has ever been looking for a home within a tight budget, you may have had the opportunity to consider a home that went through the foreclosure process.

The length of a foreclosure process varies by state. In Pittsburgh and the surrounding areas, a lender must use the judicial foreclosure process because that is Pennsylvania law. The judicial process in Pennsylvania reportedly takes 90 days.

Purchasing a foreclosed home isn’t always a bad decision. You can often find diamonds in the rough at a low price. If the home is in the pre-foreclosure stage, you could get it through a short sale. If a bank is motivated to sell the property quickly, that could be a good negotiation tool for you. It is also a plus that you won’t be responsible for any liens or back taxes from the previous owner since the home’s title is cleared.

Dangers of Purchasing Foreclosed Homes

Although foreclosed homes are sometimes great deals, there are some potential pitfalls that you should be cognizant of.

Occupants

When dealing with a foreclosure, the occupant is often still in the home throughout the foreclosure process. How would you feel if you were losing your home because you couldn’t afford the payments? Some people would take it with grace, but that’s unfortunately not always the case. There are many instances where the occupant damages the home out of spite and hurt feelings. For example, they may leave holes in the walls, destroy appliances, let their pets urinate and defecate on the floors, etc. If you ask a real estate agent, I’m sure they could tell you some horror stories.

Repairs

The bottom line is that you don’t know what condition the home will be left in. If the property is at auction, you won’t even get to see the interior until you’ve already paid in full. Even if you are able to see the property’s interior prior to the sale, you may not be able to request repairs before buying the home. What you see is what you get. If the property is in bad shape or not up to code in specific ways, it may limit the possibility of some loans, such as an FHA loan. Although this varies on a case-by-case basis.

Competition

With the recent surge in real estate investors who flip property for profit, you may find yourself competing with other potential buyers for the same property. This is especially true at an auction. Before going in, set a hard budget for yourself and don’t pay more than you would earn from the property in the end. To give yourself an edge, have the required funds available to pay a foreclosed property’s outstanding mortgage balance to the lender.

For all the information you’ll need about risks and potential benefits of purchasing a foreclosed home, consult a trusted local real estate agent.

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Jason Cohen (Pittsburgh) originally posted this content at JasonCohenPittsburgh.com.

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5 Red Flags Home Buyers Should Take Note Of

As a veteran real estate professional working in Pittsburgh, Jason Cohen well-equipped to assess the risks and potential associated with a property. In this post, Jason Cohen uses his hard-won experience to highlight a few red flags that buyers should make note of when they tour a home.

With their new appliances, sleek countertops, and freshly-painted walls, remodeled houses are meant to impress. For a potential buyer conducting their first walk-through, the surface appeal of a touched-up house can be appealing; however, first-time buyers should avoid making a decision based off of aesthetic appeal. Unfortunately, a number of renovators choose to prioritize cheap cosmetic updates over more vital (and expensive) structural renovations – leaving the unaware buyer with the heavy financial burden of making expensive repairs. Don’t be pulled in by a flashy hack job – watch out for these warning signs when you walk through a home!

Cracks in the Walls

Contrary to what old horror movies might suggest, wall cracks aren’t par for course in old homes. Watch out for splits in brick walls, and makes sure to consult an expert if you think a wall fissure might be more than a cosmetic problem. Don’t take the issue lightly! Wall cracks can indicate severe structural issues and shouldn’t be left unchecked.

Old Roofing

The last thing a buyer wants to do after shelling out tens – or hundreds – of thousands of dollars on a home is sink even more resources into fixing its roof. When built well, roofs remain strong for roughly thirty years. When done incorrectly, they last for considerably less time and can demand as much as $30,000 to repair. Be proactive by enlisting the help of an expert to inspect the roof or asking to see the property’s inspection records.

Fresh Paint in an Old House

A fresh layer of paint usually isn’t something to worry about. However, if it seems as though a house hasn’t been fixed up beside a few patches of paint on the ceiling, beware! Some sellers attempt to cover up termite or water damage by painting over it. Make sure to ask the seller about any suspicious paint jobs before you proceed with the buy.

Water in the Basement

Properly maintained basements aren’t soggy. Moreover, buyers who see water in the basement should worry about more than cleaning on rainy days; according to home inspector William Kibbel, “The wettest crawlspaces (and basements) seem to be directly related to exterior drainage issues. Ground sloping towards the foundation, clogged or missing gutters, and downspouts not properly extended can all contribute to elevated moisture levels and even regular water intrusion.” If you have the funds and time to optimize a home’s exterior drainage problems, you should purchase the house. Otherwise, you may want to let the property go.

Uneven Flooring

Saggy flooring near a home’s bathrooms often indicates greater problems with the property’s plumbing system. Make sure to have an inspector check the plumbing, lest you find yourself with serious issues down the line!

Never, ever be afraid to ask questions. Buyers are entitled to the right to inspect potential purchases and ensure that they really are getting everything they pay for. Take walk-through inspections seriously, and don’t be fooled by a flashy renovation!

*Originally posted on JasonCohenPittsburgh.net