- It is incumbent on the buyer of a foreclosed property to research the history of the home. A full title search will yield information about existing liens or unpaid property taxes. You must also research zoning, flood plains or other hazardous land use that may affect the property. Buying at auction is the riskiest way to invest in a foreclosed property. Read up on how the auction process works so you'll be at an advantage when bidding. Don't forget to look into your financing options ahead of the actual auction.
- Most foreclosures are sold "as is" and, as such, may be in disrepair or neglect. The buyer must take it upon himself to know what the "as is" contract entails. Have the home inspected from top to bottom. Thoroughly inspect the structural components; for instance, the roof, electrical, plumbing and heating and cooling. Inspect the exterior for dry rot, mold or termites. Get an estimate for all repairs necessary to bring the house up to move-in condition.
- If you buy a foreclosure that is occupied by tenants and you want to move into the property, you must evict the tenants by terminating their lease. While that may sound harsh, laws enacted by President Obama in 2009 give the tenant up to 90 days to find a new home. If you do not intend to occupy the home, the tenants may stay through the end of their lease. You may also be responsible to return the tenant's original security deposit to them upon move out. Prior to this law, unsuspecting tenants who paid rent to live in a pre-foreclosed home may have been locked out with no recourse or place to live.
- The laws pertaining to foreclosure are complex and getting involved in the process is not for the timid. You may encounter legal challenges, such as the original owner's right to bring his mortgage current, just as you are firmly entrenched in the process of buying his home. You owe it to yourself to learn your local and state laws relating to a foreclosure purchase.
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