Foreclosure or Not Foreclosure? That is the Question!

Foreclosures are the only thing worth buying. Foreclosures are the best deals on the market. Foreclosures are the only way to make money in Real Estate, right? WRONG! Buying a foreclosure isn't always as great as it's cracked up to be. They are definitely not for the faint at heart.

Yes, foreclosures can be great deals at times. You should do your homework. When you buy a foreclosure in Texas, the seller (banks generally) aren't required to provide a Seller's Disclosure Notice. A Seller's Disclosure Notice is 5 pages of information on the home that a regular seller will provide for you. When it comes to foreclosures, what you see is what you get. You need to have a good inspection done on the home to uncover any hidden damages or unforeseen repairs. Keep in mind that an inspector will only inspect what they can see. Pipes and electrical, etc behind the wall is all a guessing game until you need to open it up for renovations or repairs. Banks will generally only sell foreclosures "AS IS" so you need to be prepared with the finances to make what repairs need to be made.

You should be aware of what type of financing the subject foreclosure will qualify for as well. If you are pre-approved for an FHA loan, the home is going to have to be in pretty decent shape, essentially livable. When I personally bought a foreclosure home with an FHA loan, I had to replace a broken window and repair a hole in the wall before they would close it. I have seen FHA deny loans on homes for lack of floor covering, missing appliances, etc.

All in all, your best bet is to work with an experienced Broker to help you through the process. You will need to work with a Broker that knows how to win the bids on foreclosures. Not every agent knows how. It comes with years of practice and learning exactly what the banks are looking for. As always, should you need any help, I am only a phone call, email, text or twitter away!