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The Real Cost of Foreclosure

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By : Julie Thompson    99 or more times read
Purchasing foreclosed homes for some people yields great returns on them. However, there are lots of hidden costs that you may not see and worry about during your traditional real estate purchase. Ignoring the issues of this hidden cost will turn into a great lost. If you do not have any previous knowledge about foreclosure, you have to take time to understand all the risks involve in foreclosure. Do not just focus your mind on the rewards you can get out of buying a foreclosed home. The following are facts you have to be aware of.

It is important to make sure that you have thoroughly research about the true value of the property. You need to assess the value of the property in today’s market condition. In a conventional purchase that includes a mortgage, the lender will not likely offer you to pay more than the appraised price of the property. But you have to remember that the foreclosure sale has no restrictions.

Aside from that, you are also the one responsible in knowing the true condition of the property inside and out. It is not a mistake to buy a foreclosed home in poor condition, but you need to know how much money you have to spend regarding the renovation of the property. Do not ignore the time frame of the renovation. Licensed house inspector can help you assess the condition of the property, you need to hire a licensed inspector to make sure that they know what to inspect.

It is imperative to make sure that you have a clean title over the property. Failure to ensure will not allow you to resell the property later on. There might be liens on the property and you will be liable for that. Together with the tile, you also have to ensure that there is a valid certificate of occupancy. If you do not see one on the file the seller should vet one from the local government office. If you are planning to rent the property instead of selling it, be sure to have proper zoning to allow rentals. The property must have a rental permit, that is readily available, and a fee you can live with. There is also sales tax you have to pay regarding the rental income.

It is important for you to make sure that the foreclosed property is not occupied by nuisance. It can be very hard and time consuming to evict people. There are instances when owners do not want to leave their home even if it is already sold to a new owner. Carefully read all important documents associated with the purchase. If you do not have first-hand knowledge about these important documents, it would be very helpful if you will hire a real estate attorney to advise you. You should consult a trusted real estate agent if you really want to purchase foreclosed property.

Purchasing a foreclosed property is more complicated than going in a traditional purchase. If you are expecting an extra reward on your purchase, you have to exert effort to earn this reward.
Julie Thompson, has been working on studying the foreclosures market, helping buyers on the finer points of Santa Ana. Try to visit and find all related information about foreclosed homes.

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