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What Should I Look For When Buying a Pre-Foreclosure or REO?

When buying a pre-foreclosure, REO property or a home at foreclosure auction it is crucial to consider all the numbers.

Some properties may have additional encumbrances (liens) that you could become responsible for in order to take title to the property. In addition it is important to be aware of any taxes owed or unpaid utilities since these charges can also be assessed to the home. If you plan to purchase a pre-foreclosure it is essential that these issues be addressed.

Also, in the case of distressed properties, it is important to take into account any foreseeable repairs and how they add/detract from the home’s value. Be sure to compare your property to available and recently sold homes in the area to have a better understanding of your property’s worth.

In most cases, foreclosed properties are sold “AS-IS” and are priced accordingly. This means that there are no guarantees or warranties as to the home’s condition. Consider the “sweat equity, or cost benefit of making those repairs in comparison to the marketable value. Inspections are not always available, but if they are, you may run into problems during the colder months because of winterization. These “down-cold” conditions often make it difficult to inspect plumbing and heating functionality, so be sure to keep that in mind when you are buying a foreclosed property that is vacant. You may not be given the opportunity to have the home de-winterized in order to complete the necessary inspections so may allowanced for repairs that may be needed.

Finally, be sure you are working with an agent that is specializes in REO and foreclosure properties. Many of the documents and disclosures are specific to these types of transactions. It is best to have someone who is familiar with the process since there will be many conditions to meet and an agent inexperienced with this field could find it daunting.

Island Advantage Realty

Island Advantage Realty, LLC has established itself as an innovator and leader in the REO market throughout Metropolitan New York and Long Island. With 20 years of experience handling foreclosed and residential properties, you can rely on our knowledgeable team of agents to assist you with all of your Real Estate needs. Trust the experts. Trust Island Advantage.

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