It’s hard to get through a magazine or a news program today without hearing about the foreclosure rates in your area. Depending on where you live, you might hear that foreclosure rates are on the rise and hear about how investors made millions buying and flipping those homes. While you can get a good deal buying a foreclosed home, there is no guarantee that you’ll find the perfect home for your family. There are some things you need to consider when deciding whether a foreclosed home is right for you.
How Much Can You Afford?
Though you may hear about the deals associated with foreclosures, those prices aren’t always as low as you might expect. The bank forecloses on a home when the individual who took out a mortgage loan stops paying on that loan. Banks want to get as much as possible back from that home, which can lead to some higher prices. Depending on where you live, you might see homes priced as high as $750,000 or homes listed at over $1 million. Not everyone can afford the cost of buying a foreclosed house in a high price city.
There Isn’t a Guarantee
When you buy a home listed on the market with a company like Realty ONE Group, you can arrange for an inspection before signing the paperwork. Foreclosures typically do not come with any type of guarantee and usually do not allow buyers to inspect the home first. If you buy at auction, you may find that you cannot even go inside and look at the condition of the interior. You need to make sure that you have have money in your budget to cover unexpected costs, including repairing walls, replacing the electrical system or bringing the home up to code.
Flipping vs. Buying
Flipping a home involves buying a home, making some necessary and cosmetic changes and selling the house for a small or large profit later. Instead of living in the house, most flippers put the home back on the market within a few months or less. A real estate professional like Kuba Jewgieniew might suggest that you look at the cash you have on hand before becoming a flipper. Buying foreclosed homes may help you save money upfront, but you’ll need enough cash to cover your other expenses until the house sells. You need to look at all these factors before deciding if a foreclosure is right for you.