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Buyer Should Be Beware When They are Buying the Foreclosed Property

Get the home inspected professionally

Before buying the foreclosed property, the prospective buyer should get the house inspected professionally. In a recent case, an old woman bought the foreclosed property from a bank. When she went to check the property, the water and the heating systems were shut down by the bank and she couldn’t inspect the house properly. After she bought the house and turned on the systems, she discovered that there was a leak in the pipes and the heating wasn’t working. At this point of time she can’t blame the bank.

Inspection Contingency clause

Instead she has to now fix the problems at her own expense. It’s essential that investors get an independent home inspector to thoroughly check the foreclosed property before buying the property. There should be an “inspection contingency” in the sale and purchase contract. This means that the buyer is given a stipulated time frame within which they need to inspect the property. If any problems are found in the home, then the contract would stand null and void (the earnest deposit would be returned to the buyer) or the seller would agree to make repairs in the house at the sellers cost. Lenders and banks like to dispose the property as soon as possible since they would be paying the insurance and the estate taxes if the property remains with them.

Getting cash credit

Many of the buyers also prefer cash credit. This means that the buyers can oversee the work that is been done, since they have to live in the house. Many buyers would like to remodel the house, in which case, the entire work done by the seller would be wasted. Many of the sellers may even do a rush job on the repairs from an unlicensed contractor.

The pre settlement clause

Buyers should also put in the clause of “pre settlement inspection” in their sales contract. This means that the property is as it’s supposed to be at the time of closing. The inspection should be done at the time of the settlement. In the morning and never before the settlement or at night. This ensures that the seller hasn’t removed any lighting fixture and other fittings. At this point it can also be ensured that the previous owner has removed the junk and hasn’t trashed out the place. The previous owner may have to for damages if they have trashed the house on their way out.

Still way out of foreclosure for many homeowners

For those that are facing foreclosure, there is still some hope. According to the Federal Foreclosure Relief Act, the lender can extend refinance on the terms that you can afford to pay back. Also talk to some senior person in the company. See if things can be worked out. Usually they can be. Since the lender doesn’t want another foreclosed property on their hands. If worse comes to worse, then attend the foreclosure sale and see who purchase the home. At times the new owners let you live in the same house by paying some rent till you can move out to another place.