Beware These 5 Caveats When Buying a Foreclosure

At first thought, buying a foreclosure seems like a great opportunity. But wait! Not all foreclosure houses are great deals. There are many factors to consider and verify before making an offer and before closing the escrow.
Ethan Roberts of Tycoon Publishing offered the following five caveats from his own experience as an investor who has bought (and not bought) foreclosed houses. This is an excerpt from his article published November 6, 2009.
Feel welcome to contact Jean Mitchell if you have questions or concerns about buying foreclosed a house.
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Thanks to the tax credit for first-time homebuyers along with low interest rates, home sales have been creeping up during the past few months.
However, a very large percentage of home sales are either foreclosures or short sales.
First-time buyers and investors alike are looking for a deal -- whether as a safeguard against further market decline, as a way to lower their monthly payment, or as a vehicle to increase potential profits.
If you are not careful, you might get a home at a great price, but you can also inherit some big problems. So that you don't find yourself investing in a money pit, I'd like to talk to you about some of the most-common problems you might encounter today.
1. You Get What They Don't Pay for
First, what you must realize about foreclosures is that they are often neglected by their former owners. The routine-maintenance projects that people do to keep up their homes are usually not done, because the owner cannot afford to do them.
So you have to be aware that, even if you have all of the necessary inspections done before you sign on the dotted line, you could still find other minor problems after you close on the home.
2. Beware of a Real 'Steal'
Second, with some foreclosures there is a problem with theft or vandalism. It is bad enough when the thefts occur prior to your bidding on the property. At least then you know what is missing and can bid accordingly. However, sometimes the thefts or vandalism occur after you have already gone to contract.
3. Know Your Boundaries
Third, although the banks will not usually pay for a survey, make sure that you have one done. Most mortgage companies will demand that a survey be performed, but it is recommended even on cash deals.
4. Know Whether the Deed is Really Done
Fourth, understand that sometimes with foreclosures, there are title problems that can delay or even prevent the closing from taking place.
5. Don't Spend a Dime Till You Can Say 'The Title is Mine'
Fifth, if the foreclosure you are buying is sold at public auction, in some states you cannot receive the certificate of title for 10 days. During that time, the previous owner has the right to pay off his mortgage debt in full and reclaim his home.
So, you had better wait until you have the certificate in hand before starting any work on the house. Otherwise, you might just wind up remodeling another person's home for free!

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So, if you have questions or concerns about buying a foreclosure home, call Jean Mitchell at (916) 209-8188 or visit her website at www.JeanSellsRealEstate.com.