Home foreclosures don’t seem to be slowing down anytime soon, according to MSN Real Estate. Thousands of homes are out there each month for sale at auction, and typically these can be had for 25 percent less than their market value. In many cases, much less.
But hold on a second. Getting a good deal doesn’t mean the property is move-in ready. Auctions are usually the riskiest way to get a home on the cheap, because they’re priced to move with no inspection from the buyer before the sale. Without inspection, how do you know these homes are safe?
Another option is Real Estate-owned (REO) property bought after foreclosure, which you can inspect beforehand, but the savings will probably be much less. And these homes may have been left in disrepair while unoccupied for long periods of time.
Either way, here are some things to keep in mind safety-wise when buying cheap property.
Research the neighborhood. Were the surrounding homes built by reputable people? Have they shown damage as time has gone on? Has the value gone down disproportionately compared to other neighborhoods in the area? Have neighboring homeowners had problems with their homes structurally? An example would be leaks caused by flat roofs or cracks in the foundation. Another thing to look out for is proximity to hazards, like toxic waste dumps, planned flight routes from a nearby airport or high tension electric power lines. All of these factors would make the home unlivable and can’t be fixed.
If you’re buying at auction and get what looks to be something solid, you can bring in an inspector after the fact. But even with REO homes, many are falling apart. You should be looking at things like mechanical systems – plumbing, heating, electrical and septic.
Some foreclosed homes, having been vacated for a year or longer, have toxic mold built up, maybe from a pipe that burst because the heat was never turned on in the winter. Other things to look for are asbestos, radon gas and lead paint. All of these make an immediate move-in impossible. But they can be taken care of with professional services and might not necessarily be a deterrent to getting a great deal. Especially in Detroit, where you could purchase this house for $1. It needs a little work.