Are Foreclosures Safe Buys for a Live-In Home?

The short answer: Absolutely! Of course, the long answer involves several issues you will want to consider before you say yes to purchasing a foreclosure on the market. 

First, a little about the foreclosure process itself. A foreclosure is a house or other property that is being sold because the owner can no longer make the mortgage payments on the home loan. The lender has determined that the loan is formally in default and is initiating legal remedies against the homeowner. These involve sending the homeowner a legal notice of an intent to take possession of the property and sell the home.

Some Issues to Consider Before Buying  a Foreclosure

When purchasing a foreclosure, there are a few issues to consider before trying to make a purchase on a specific property. The first is the condition of the home itself. It is generally unwise to invest in a foreclosure that requires several major repairs. These could cost thousands of dollars and generally will not be ready to live in without a significant investment of time and capital. As such, those looking for a live-in home who are not willing to make that investment should make sure that only relatively-minor repairs need to be made.

The second issue involves cost. This includes the auction cost and any associated costs with the home. Some homes come with tax liens from the IRS. These are risky because the home can be repossessed by the IRS, even after you make the purchase. Also, a home may not be significantly discounted at auction, which means you could still be paying for an overpriced property even after foreclosure.

Remember: most of foreclosures are good deals, however some may be discounted and may still be overpriced. Pay close attention to the market trends in the local area. You do not want to invest in a home only to have difficulty financing it or making payments yourself.

For the most part, though, foreclosures represent excellent opportunities to buy properties to live in, especially if you pay attention to the state of the home and the total cost.