Foreclosure Risks

Now that Spring is right around the corner, buyer activity is picking up. There are still plenty of foreclosures on the market, and though there are lots of incentives to buy right now (low interest rates, first time home buyer credits through July 1, and low prices), the risks with buying a foreclosure — as well as the process itself — are significantly different.

(Update: The credit above applies to purchases in 2008–when this post was written. If you are purchasing in 2009, see updated info on the new credit here.)

I’ve provided here links to all my previous Foreclosure (and Short Sale) Related Risk posts here for convenience.

Short Sales vs Foreclosures – What’s the Difference?

Short Sales – Are They Worth a Buyer’s Time?

Risks of Buying a Foreclosure:

Bank Addendum – Always written in the bank’s favor

Timing – Impossible to control turnaround time

Property Condition & Inspections – Unlikely (impossible?) to get repairs made, and careful to retain your ‘right to void’

Title Defects
– Be sure to have your own title inspection done!

Financing Complications – Timing and property condition issues combine to create complications with financing, too.

If you’re considering buying a foreclosure in Northern Virginia, DC, or Maryland, or need help starting your home search, contact me.

Related: Search MLS

First Time Home Buyer? Sign up for my free first time home buyer class in Arlington or DC.


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