Tips and tricks for buying a foreclosed property

It seems every market across the country has its fair share of foreclosed properties, but some people aren't content with letting them sit in disarray - instead, they are taking the opportunity to pick up a house for an extremely cheap price.

But, there may be more to these homes than meets the eye. The longer a property sits without owners, the more likely problems pile up inside. Therefore, it is a must that any potential buyer perform their due diligence before making an offer. Moving forward too quickly could cause someone to end up with a money pit.

Thankfully, a home inspection is a cost-effective and intelligent step along the way to buying a foreclosure. No purchase should be completed without one, and a positive report can equal a lot of savings down the road.

Don't expect full disclosure

So what exactly goes into buying a foreclosed house? While some people may expect banks to be forthcoming about their owned properties, odds are they'll be tight-lipped about whatever they can legally avoid saying.

Steve McLinden wrote in an article for Bankrate.com that most foreclosures - in fact, nearly all of them - are sold as is. Because of this, banks don't have to tell potential buyers a whole lot. Items left off the list include flaws and other defects, or exactly the things most people want to know about. That means it is up to the buyer to put in the legwork before making an offer. The longer the home has been vacant, the more maintenance issues will be waiting inside.

Step one is to get the power restored, according to McLinden. Nearly all foreclosures that have been vacant for a period of time are sitting in the dark, so checking crucial components is much more difficult without electricity. This can cost money, because an new electric meter may have to be installed, then it has to be inspected, followed by a thorough check of the property by an electrician. Once all of those steps are completed, then a home inspection can take place.

However, these expenses are often worth it. For a few hundred extra dollars, thousands can be saved off the closing price of the home. It is just extremely important that due diligence is completed beforehand, especially a property inspection. 

Plan ahead before buying a foreclosure

There are a lot of steps to be completed before buying a foreclosed house. Those who take the time, though, often end up with their dream homes at a very low cost. 

According to This Old House, buyers have to budget carefully before starting the process. The low price of the property can make rushing forward a tempting prospect, but it is better to wait. Some repairs will be needed one way or another, and the proper inspections and steps have to be taken ahead of time. Most importantly, buyers have to actually look at the house themselves. No foreclosure can be bought sight unseen, even by real estate investors.

In addition, it matters how long the home has been vacant, the news source noted. A long period of time will equal more damage, and there will be problems with the plumbing, sewer, insects and other components. It is worth checking out the landscaping, too, and an unkempt yard can be a sign of more issues to come.

"If the house has been neglected, untrimmed trees, vines and bushes contribute to the deterioration of the house," Bill Richardson, the American Society of Home Inspectors president, told This Old House. "It doesn't take very big trees to mess up pavers, and dead branches crash into the house."

One way or another, a home inspection should be completed. A concise, detailed report will be a valuable asset for buyers on the fence about purchasing that foreclosure.