Q: We are looking at a home in a great neighborhood but are nervous because the house was foreclosed by the bank, which is now selling it. Is this a bad idea?
A: Foreclosed homes sold by lender’s “REO” or real estate owned department can be bought at a favorable price, but there can be some downsides.
The same can be said for foreclosed homes bought by real estate investors on the courthouse steps.
If you take these potential issues into account, you could end up paying an excellent price for your new digs.
REO purchase contracts are very one-sided, so be sure to review the terms carefully. It would help if you also considered that your seller never lived in the home and might not have even visited it in person.
Combine this with the fact that most people do not spend much time and money taking care of a house they are about to lose to foreclosure and that it might have been empty for an extended period, and you need to be extra diligent.
It is crucial that you thoroughly inspect the condition of the home both with a general inspector and follow up with specialists for any concerns noted in the report.
You should also have a land survey done and check with the municipality to make sure that there are no code violations or permitting issues.
Talk to the neighbors to see if they know about any problems with the property.
If the seller made repairs, be sure to carefully check them to ensure that they are not just covering up more extensive issues.
If you notice anything that does not make sense to you, whether in the contract, with the city, or the condition of the home, get an experienced professional look into it to make sure that what you are buying suits your needs.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. Send him questions online at www.sunsentinel.com/askpro or follow him on Twitter @GarySingerLaw.