Examining the Pros and Cons of Purchasing a Dallas-Fort Worth Home in Foreclosure

When searching for a home to purchase, many potential buyers are interested in purchasing a foreclosure. After all, it is common knowledge that a foreclosure is less expensive than purchasing a home that has not gone into foreclosure.

While it is true that foreclosures are typically less expensive, it is also important to realize that there are some potential drawbacks and some roadblocks involved with purchasing a foreclosure. Therefore, you need to be sure to learn the pros and cons of purchasing a foreclosure before you decide if this is the right option for you.

Understanding the Foreclosure Process

While there are different types of foreclosures, most people associate the term with the court auction. With a court auction foreclosure, the owner has fallen behind on payments and the court attempts to sell the house at auction.

Typically, the lender sets a minimum figure that must be met before the house can be sold. Unfortunately, bidders usually cannot inspect the house before making a bid, which means you could end up purchasing a home that is severely damaged inside. You may also end up with a home with many liens that need to be paid. Furthermore, most auctions will only accept a cash payment, which creates a difficult situation if you need to obtain a loan in order to purchase the home.

Some foreclosures are also known as REO, or Real Estate Owned, properties. REO properties are homes that did not sell at auction and so the lender has retained ownership. When purchasing an REO property, you can be sure there are no surprise liens and you may have the opportunity to inspect the home beforehand. These homes are typically available at a reduced price because the lender wants to get rid of the property as quickly as possible.

Avoiding Trouble When Purchasing a Foreclosure

Since a foreclosure might have liens or other legal concerns, it is in your best interest to hire a title company or a lawyer to perform the necessary research on the property before you make a purchase. These professionals can determine if there are liens for homeowners’ association dues, unpaid taxes or any loans that have been taken out with the home as collateral.

Failure to do the necessary research could result in you being responsible for paying thousands of dollars you didn’t expect to inherit when you purchased your foreclosure.

Recognizing the Risks

Even after doing a thorough title search, you are still taking a risk when purchasing a foreclosure at auction. Since you cannot inspect the home beforehand, you may find that the home is damaged inside.

In some cases, the previous owners may have caused this damage. In other cases, it may have been damaged by vandals or thieves. The latter could be possible if the house has been vacant for some time. The house may also have weather damage or damage from water, mold or a pest infestation.

To learn more about purchasing a foreclosure or any available North Texas home please feel free to contact our team of property experts today.

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