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Top 3 Purchasing Preforeclosure Roadblocks and What You Can Do About It



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By : Jacquelyn Marks    99 or more times read
Many people are looking into purchasing a preforeclosed property in the hopes of cutting a good deal. This is well and good. In fact, now is the best time to go for that dream house of yours, while the prices are still extremely low. However, if it is your first time to purchase a house, you need to come properly prepared of the ins and outs, especially in view of the tough financial climate.


How to Avoid Unpleasant Surprises

You have found the ideal foreclosed property and you are looking forwarding to getting the keys to the house. What could possibly go wrong? Here are some of the most common pitfalls you can deftly avoid:


Roadblock #1: When the Property Appraisal Kills the Deal

Even if you and the seller has already agreed on the price, the appraiser or the expert assigned by the bank will need to authenticate the value of the property Ė which can potentially ruin a perfectly good investment opportunity.

To have a better understanding, the banks and other lending institutions these days are overly cautious when it comes to granting home loans in view of the economic crisis. With the growing number of foreclosed properties and REO homes today, they want to make sure your home will not be added to this pile. Your bank will send over an appraiser to determine the value of the property. Typically, appraisals will be based on the prevailing value of recent sales in the neighborhood. If your appraiser is not familiar with the community, a deal could potentially slip off your grasp.

What you can do about it?

Get a good real estate agent who has an extensive experience in facilitating foreclosed property sales in the neighborhood. He can show the bank appraiser some of the nearby homes with the same floor plan and size that have been sold for a higher value. This can prompt the appraiser to revise the property to a price that you and the seller had originally agreed.


Roadblock #2: Your Lender Requires Home Repairs

Lenders these days can potentially hold up a sale if the appraiser will point out some repairs need to be done. The home loan will not be released until your preforeclosed home seller will comply with the required fixes. Lenders these days want to make sure that the properties they will finance are in good condition.

What you can do about it?

You need to anticipate for possible issues by taking a critical scrutiny of the preforeclosed property you want to house as against the inspectorís report. This can help you identify potential problems. Make sure that all the conditions that have been listed in your purchase as well as the sale agreement will be met to avoid unnecessary delays.


Roadblock #3: The Preforeclosed Property Comes with Extra Baggage

Unpleasant surprises may crop up when you least expect it. While we all look forward to a smooth sale, one can never be too careful. Among the possible issues include the following:

  1. When there is another party aside from the preforeclosure seller who has claim on the property, such as creditors, contractors or suppliers, tax liens or lawsuits that you may not be aware of.


  2. Missing permits can also be a major roadblock.


  3. The property boundaries are inaccurate due to title errors.


What you can do about it?

Make sure to purchase an insurance title, so you can make sure your claim on the property is well protected. If your insurer will decline from providing insurance to the title of that preforeclosed deal, it is best to walk away and consider other prospects.

Now that you have a better idea of the common roadblocks, you have better chances of ensuring a deal to pull through without a hitch. Keep in mind that these pitfalls should not pose as a deterrent or discourage you on purchasing a perfectly good preforeclosed home. Economic crisis or not, these are common issues that come with home purchases.
Foreclosure.com is the leading provider for foreclosure listings online.

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