Buying A Foreclosure May Not End Up Being A Bargain For Some Homebuyers!

With all of the home foreclosures on the market

, many Real Estate investors and potential new home owners are looking to the bank-owned property market as a way to get a 'steal' on a piece of property.

While in many cases this can be a great way to obtain a potential rental property, vacation home, or first-time home, it can also come with plenty of unintended consequences and expenses.

While some foreclosed properties are selling for around the 50% mark of the previous sale price, many can come with extra unpaid property taxes, mortgage payments, and even other liens that are tied to the property from things like second mortgages or renovations gone bad.

Then there is the potential that a foreclosed property still has the previous tenets living in it while refusing to move, regardless that they are no longer the home owners.

There are plenty of homes that have been foreclosed on that have also been damaged or trashed by a prior tenet that was angry about foreclosure. There was even one man near Cleveland, Ohio who bulldozed his entire house because he was headed into foreclosure.

The word of warning for auctions and similar situations like this is to always try to get some sort of idea of the property before buying. Many auctions will not let you inspect a property before buying it, thus making it impossible to know about the condition of the home in advance.

The best case for any investor or potential home-owner is to buy the property directly through the lender that foreclosed on it. They will have the most information regarding the home's condition, prior tenets, and potential pitfalls before you are on the hook for the property.

You may not get as good of a price as you would have at the auction, but often times you can inspect the house before buying and be sure there are no outstanding debts or claims against it. It is always best to do your homework and to work with a professional such as the lender when looking at acquiring a foreclosure.

That said, there are so many good deals available to real estate investors out there that it is well worth the effort. It is also great to purchase a property with money from your self-directed IRA or 401(k).

Using a self-directed IRA to invest in Real Estate is a great way to earn rental revenue, buy property at the deepest discounted property prices in decades, and to secure yourself a wealthy retirement.

by: Paul Whitacre

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