Generally speaking, most of the foreclosed homes that I’ve been involved with have a lot of “deferred maintenance” items. The financial circumstances that lead to foreclosure don’t leave a lot of money for niceties like repainting (resulting in wood rot) and roof replacement (leading to leaks and interior damage). Home owners in financial straits that lead to foreclosure often come up with ingenious DIY solutions to home maintenance problems. One foreclosure had experienced some sort of massive plumbing failure, so the entire house (two and a half stories, over 3500 sf) had pex plumbing run on the outside of the walls, fully exposed. The fella who bought and rehabbed that property spent a ton of money re-plumbing the entire house.
Also, foreclosures often sit empty for a long time, both before the foreclosure sale, and after the sale, and during that time roofs start to leak, animals come down the chimney, and worst of all, many homes have food in the fridge after the power has been turned off. My one hard and fast rule when going through a foreclosure is “Do not open the refrigerator under ANY circumstances”. You’ll never forget that smell. Never.
Most of the foreclosed homes that are bank-owned are difficult to buy with a mortgage because of their condition. Banks won’t lend money on a home with a leaky roof, broken HVAC, or plumbing problems. As a result, buyers pay for these homes in cash, so the pool of buyers for these homes is small.
When looking at a foreclosure for purchase, I expect that these houses will require new roof, new HVAC, new paint inside and out, new flooring, new energy efficient windows, and new bathrooms (cabinets and fixtures).
That said, I’ve also been in foreclosures that were neat as a pin, usually as a result of the property preservation company cleaning it out and doing a good job maintaining the property.
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