4 Tips for Buying a Foreclosed Home in Orange County

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Have you ever glanced through homes for sale? If you’re like many browsers, foreclosure status piques your interest. There’s something intriguing about the word.

With the prevalence of foreclosed homes throughout the years, many buyers have gone from browsing to pursuing purchasing a foreclosure. If this is part of your home-buying strategy, here are four tips to make sure your investment is a good one.

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1) Secure a Title Report

When considering a foreclosed home, the first thing you want to do is secure a title report. You need to have a clear title to proceed through the sale smoothly. Elements that disrupt the sales process, sometimes making a particular home not worth the investment, can be unpaid taxes, disrupted loan paperwork, complications identifying owner or lien disputes.

 

Many times the complications and excessive paperwork can add in additional costs to the closing. Depending on the complexity of the state of affairs, a real estate lawyer may be needed to review the documents.

Securing a title report early on in the process gives you the best insights to decide if you want to move forward on the property.

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Securing a title report early on in the process gives you the best insights to decide if you want to move forward on the property.

2) Home Inspection

Foreclosures sidestep one of the most important protective measures for buyers—disclosures. Typically a Realtor® and the homeowner are required to disclose everything about the property, from indicating if there has been a death on the property to structural problems to leaks and more. Foreclosures are exempt from disclosures.

 

The reason is that the seller typically has never lived in the property. Banks are the most common seller in a foreclosure scenario. They take over ownership when the current owner can no longer make their payments.

This heightens the importance of a home inspection, as it is the only insight you have to the true state of the property. Remember that many issues hide within the walls, shadows or pipes of a property.Also consider the previous homeowner. The majority of homeowners foreclosed on are angry about the situation. Oftentimes, they take their frustration out on the property. Occasionally you will encounter an extremely vindictive former homeowner who stuffs trash in the pipes.

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3) Interview Neighbors

Due to the lack of disclosures and never getting to meet the previous owners, foreclosures can be a risky investment. To gather as much information about the property, particularly the former owners, interview the neighbors. Ensure that the former owners won’t have any unsavory friends stopping by in the future. You never want to put your family at risk.

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4) Gather Options

The prevailing misconception about foreclosures is that everyone instantly classifies it as a deal. That may have been the case a decade ago, but today the majority of foreclosures come out of the gate at market rate. With all the risks and unknowns, it might be better to go with an owner occupied property.

Additionally, the process can extend out beyond a desired timeframe depending on the complexity of the title and liens. 

The more options you have, the better equipped you will be to decide what makes the most sense for you and your family. All things being equal, given the option between a home with disclosures versus a home without, Realtors will always advise you to choose the home with disclosures. 

Reinvest into the Community

If you are looking to buy a home, consider our real estate. Both our nonprofit status and social enterprise model separate us from your traditiona Realtor. First, our Realtors don’t work on commission. As a salaried Friendly Experts, they aren’t in it for the sale. They want to ensure that you make a decision that best fits your needs.

Secondly, we reinvest revenue back into the community through our low cost homebuyer education, free financial services, and community-building programs. At NeighborWorks Orange County, our mission is to strengthen communities. A large portion of that mission is helping families and individuals like you realize homeownership and make Orange County a better home for all.