What are the advantage and disadvantages to buying a foreclosed home?

Asked over 2 years ago - Dallas, TX

Are there any extra pot holes or potential difficulties I should be aware of?


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Attorney answers (1)

  1. Brian W. Erikson

    Pro

    Contributor Level 18

    Answered . The principal advantage generally is a cheaper price.

    There are a number of disadvantages. Typically, there will be little or no seller disclosure of defects. The property will be sold "as is" with you being responsible for all the defects. You should negotiate a cap amount of money to correct defects that are discovered during your inspection of the property. That way, you can have an escape if the property turns out to have significant and costly defects.

    Also, there can be title problems, so securing a title policy is very important. In addition to securing a title policy, you need to read and comprehend the exceptions to coverage that the title insurer is listing. Some exceptions may be so significant that they are deal breakers.

    Sometimes, the former owner has litigation on file concerning the property. The litigation could tie up or cloud the title for an extended period. So, negotiating a hold harmless and indemnity provision with the seller is very important.

    Since you are in the Dallas area, you may wish to take advantage of my free hour of consultation for new clients. If you make an appointment, please bring copies of your pertinent paperwork.

    Good luck.

    Hope this helps. If you think this post was a good answer, please click the “good answer” button below and/or designate my answer as the best answer. Thanks.

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