Foreclosures – Four Major Risks for Buyers

by Shea Homes Arizona on January 18, 2012

At first glance, buying a foreclosed home may seem like a great opportunity.  However, there are some serious risks associated with foreclosures that cause many buyers to think twice.

Hidden Costs and Damages

Often times, previous owners or looters will strip the home of its appliances, fixtures, and even copper piping and wiring.  In many cases, this type of theft leaves the home unlivable until extensive repairs are made.  According to the Arizona Republic, Arizona has one of the worst records for this problem.

Extensive Repairs

In addition to missing appliances, pipes, and fixtures, most foreclosed homes are in need of substantial repairs and clean up. Many valley foreclosed properties have been seriously neglected and abused. One valley couple hoping to purchase a home shared with us that most of the foreclosed properties they looked at were “trashed, overgrown, and had even been broken into a few times.” 

Limited Financing Options

Because damages and extreme neglect are commonplace among foreclosed properties, many houses do not meet minimum FHA standards, and banks are sometimes hesitant to finance them.  Unlike the traditional closing of a new home, the bank that owns the property has complete control over the closing schedule. Consequently, the buyer must be ready at any time to provide cash for closing costs.

Time Crunch

Because foreclosure sales are posted the day before they are sold in auction, there is little time to research a property in order to make a sound decision.  In addition, because of the nature of auction sales, many potential buyers compete for each property.  This frequently leads inexperienced buyers to pay more than the optimum price.

With all of the possible disappointments that can come with purchasing a foreclosed home, many buyers have sought the security of a newly built home.  To learn more about buying a new home, please visit www.SheaHomes.com.

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