Fine Homes In Columbia, SC

Yes, all the rage these days is about foreclosures.  We all empathize with those who have lost their homes through no fault of their own.   The real question is – is buying a foreclosure right for you?

First, you have to understand that if you are obtaining a mortgage to purchase a foreclosure, then you have to be particularly concerned about the condition of the property.  If you go FHA or USDA, an FHA appraisal will be done by a licensed Appraiser.  There are many facets to these appraisals and mine is not an attempt to explain them but just to point out a few things that you must be aware of.  Most foreclosures are sold “as is” “where-is” which bottom line means the seller will make no repairs and makes no warranties concerning the condition of the property.  Well, this is understandable as the lender never occupied the property and has no way of knowing if there are any hidden defects.

Your lender is going to require:  a  termite inspection, a well water test (if the property has a well), a septic tank certification (if the property has a septic tank).  In addition, before a FHA appraisal can be done, the power must be operating.    This leads to your first obstacle because you will have to have the power connected in order for these inspections or the appraisal to be done.  This could mean you may have to pay a deposit with the local utility company before the electricity will be connected.  Also, if the property has  been winterized (which most homes have been winterized by this time of year); you may be responsible for re-winterizing the property after your inspections are complete.  The re-winterization could run anywhere from $125-$250.  The termite inspection can cost from $50-$125 (depending on the contractor); the septic tank certification can cost from $125-$250 (depending on the contractor); and the well water test can cost from $125-$150 (again depending on the contractor).    Keep in mind that the cost of these inspections, deposits for utilities, and costs for re-winterization will have to be paid for by you  whether or not you ultimately purchase the property.   

Next obstacle:  If the property has no HVAC, electrical wall socket covers, floor coverings, or has exposed wiring – it will not pass a FHA appraisal.  Again, I am not an appraiser nor am I a mortgage broker, I am a real estate broker and I have been through MANY of these issues.  Many lenders will just say that the repairs have to be made before the loan will be approved.  Well, which came first – the chicken or the egg.  Ok, so there is a solution and that is a FHA 203(k) loan which is a renovation loan.  It is a lot of work for both you and your Realtor. 

Still want to purchase a foreclosure?  Well, in many cases these properties have not been vandalized and the main obstacle will be having the utilities connected so the inspections and appraisal can be done.

I’m not trying to discourage anyone from purchasing a foreclosure as many times these can be fantastic deals. 

Call me and we can talk about foreclosures.  As stated, they can be a fantastic deal but you must realize the process and what has to be done.