While there are many positives to purchasing a foreclosed home in the Greater Boston area, there are also a few negatives which you should know about before finalizing anything.
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Drawbacks of Purchasing Foreclosed Homes
- Possible Poor Condition of the House: One of the most common drawbacks associated with foreclosed homes in the Greater Boston area is dependent on how long the house hasnot been maintained. Make sure to check for damage. Take into account the amount you will have to spend on repairs before finalizing anything. In most cases, even if you have been cautious in the beginning, you will find some new damage after moving in.
- Lack of Warranty: When you purchase a brand new house in the Greater Boston area, generally you will be covered by the builders warranty if anything goes wrong. This is not the case with foreclosed homes, since they do not have any such clauses attached with them at the time of purchase. Additionally, since most foreclosed homes would have been lived in for some years, some amount of wear and tear is to be expected.
- Possible Debt Obligations: Property taxes, payments for contractors, and debts on the name of the house are some of the items which are considered the liens of the owner of the house. If the previous owner failed to pay them off in full and you purchase the house from him, you also assume the responsibilities of paying back those liens. So always conduct a search of title to uncover any possible liens.
- Multiple Offers May Drive Up The Price: The price of foreclosed homes is kept low in order to attract possible buyers. But because of this influx of buyers, at times the competition between them drives up the price. Additionally, if in such a scenario you actually love the house, your emotions might make you willing to pay more than what should be paid.
- Time Period Available for Financing: In a normal real estate transaction, you will be provided around one month’s time to finalize your finances, after determining the price you are willing to pay. This is usually not the case with foreclosed homes since the primary motivation is to sell fast. When purchasing foreclosed homes, you might have to put up a large initial deposit or at times even be forced to purchase the property with cash.
- Redemption Rights: Many states have laws which allow former owners of foreclosed homes the option of purchasing back their homes while a foreclosure procedure is being followed by settling the debt owed. The terms and conditions of these rights differ according to state, and Massachusetts has been a unique case with a lot of progressive stipulations being passed in the legislature, so make sure to ask your lender about any specific rules that could affect your purchase. This is one of the reasons to consult an expert.
Now that you know the potential drawbacks to watch out for, you can keep an eye out for them while searching for a foreclosed home in and around the Greater Boston area. This will let you weigh drawbacks against the benefits, especially potential cost savings, in purchasing a foreclosed property.