It is probable the Smith brothers contacted me through my website thinking there was an outside chance I might be a distant relative. After working the coal mines of West Virginia most of their adult lives, identical twins Floyd and Lloyd along with their younger brother Boyd are eager to relocate and experience the clean air, culture, and real estate "bargains" of scenic northern New Mexico. Despite not being related, we hit it off and it's truly going to be a pleasure sharing the Smith brother experience as we go.
Each brother has adopted his own particular idea or scheme with the perception of landing the best real estate deal possible. While Floyd is only interested in foreclosures without being location conscience, Lloyd wants to acquire several acres of land at a reasonable price to run some cows and build a home at his own pace. Boyd seems to be the handyman of the group and is looking for a great deal on a "fix me up".
Floyd was the first to visit Albuquerque. Floyd's thinking is the foreclosure route would be the way to go after hearing prices are amazingly low, interest rates are lower still, and if you act now you get a big fat government check for $8000. I sat down with Floyd to discuss some of the most common problems he might encounter. We generated a "foreclosure buyer beware" list that everyone can benefit from.
Will you inherit problems someone left behind
Foreclosures are often neglected by their former owners as many routine maintenance projects were not affordable. Often, things like having the heating and air conditioning systems cleaned, cleaning roof gutters to help prevent roof rot, or fixing a small roof leak before it does damage are neglected because homeowners who are in financial trouble rarely do even the little things necessary. Even if you have all the typical inspections done before you sign on the dotted line, be conscience that you could still find other minor problems after you close on the home.
Beware of a real "Steal"
Foreclosures are often a prime target for theft or vandalism. At least you know what is missing if thefts occur prior to bidding on the property, but sometimes thefts or vandalism occur after you have already gone to contract. Since so many people may have access to the foreclosure lockboxes or keys, make sure you do a total property walk through - 24 to 48 hours prior to closing. If there is expensive damage or items stolen, you may need to renegotiate the deal with the bank. Check your contract to see what it says about such a possibility.
Watch your property lines
Although banks will not pay for a survey, make sure you have one done. Most mortgage companies will demand that a survey be performed - and it is recommended even on cash deals. There's nothing worse than engaging an angry neighbor right off the bat about your existing fence being 3 feet over on their property. A timely survey prior to closing will eliminate any unnecessary rhubarb that you don't need.
Is the Deed really done
Sometimes with foreclosures, there are title problems that can delay or even prevent the closing from taking place. For example, if the foreclosure papers are deemed to be drawn up incorrectly with the wrong kind of deed by the foreclosure attorney, the property might have to be re-foreclosed, and then re-listed onto the market. This process would take several months costing you time and money. Be sure you getting owners' title insurance and lenders' title insurance as well if you are taking out a loan. And one last thing - never spend any money on non-returnable materials prior to closing.
A Title in hand is worth two in the bush
In some states, if the foreclosure you are buying is sold at public auction you cannot receive the certificate of title for 10 days. During that time, the previous owner has the right to pay off his mortgage debt in full and reclaim his home. So you had better wait until you have the certificate in hand before starting any work on the house. Otherwise, you might just wind up remodeling another person's home for free!
At any rate, let's emphasize that buying a foreclosure can be a great way to find a home that might otherwise not be affordable, or that may provide you with a great deal of instant equity. But just be careful, do all your due deligence, have all the inspections done....you know the drill. You may just save yourself a whole lot of time, inconvenience, and money!
Stay tuned - next week Lloyd Smith is coming to town!
If you're lucky enough to call Albuquerque home, you're LUCKY enough! Alice C Smith