If you’re considering buying distressed property such as a foreclosure, you may have heard some myths about these types of listings. Here we’ll set the record straight on what you may or may not heard about investing in a foreclosed home.
Myth 1: You must pay cash for a foreclosure
This myth can actually be true in certain circumstances, but not every foreclosure property will require a cash transaction. If you’re purchasing a foreclosure at auction, a cash payment may be necessary. Additionally, if a property is in such poor condition you may need cash because you can’t get a mortgage through a traditional lender. On the other hand, REO properties, HUD homes and many foreclosures at auction may be purchased with a home loan.
Myth 2: You can’t get an inspection on a foreclosure
This is only true when you’re buying a foreclosed property from an auction. However, if it is a real-estate-owned (REO) property, or HUD home, then you will be encouraged to get a home inspection to disclose problems with the house before you make an offer. Don’t forget an inspection typically costs anywhere from $300-500, so you may end up spending money on a home that you decide not to buy. Still, it’s a small price to pay to learn whether or not a property is the right one for you.
Myth 3: All foreclosed homes need a large amount of work
You may have heard horror stories about foreclosures that need significant repairs or turn into the dreaded “money pit.” However, each foreclosure property is different. One home may need a huge amount of improvements, while the next may be a model home that the owner only had for a couple of years. Foreclosed homes are sold in “as-is” condition, so the only way to tell the good apples from the bad is to have them inspected before you buy.
If you’re ready to check out foreclosure properties in the Denver metro area, give us a shout. The pros at Metrowest specialize in these types of sales and we’d love to help you start the process!