Foreclosures and court ordered sales attract prospective buyers because they appear to be great deals. However, they sometimes come with a great deal of risk. In most Real Estate contracts there is a clause that says the seller warrants that the property will be in substantially the same condition as when viewed by the buyer. In foreclosures this does not apply. The seller virtually warrants nothing. Foreclosures are usually sold with the phrase “as is where is” in the agreement. What this means is you get what you get. In other words when you take possession of the property it may be very different than when you viewed the property. The seller, usually a bank or insurance company, does not guarantee anything. They don’t guarantee that the roof does not leak, that the place won’t be destroyed by the previous owner or that the appliances, light fixtures, door knobs, doors etc. will still be there. If something goes wrong you are on your own. The idea behind a foreclosure is that you get the house for a cheaper price to compensate for this risk. However, in reality if there are multiple offers in court often the property sells for as much or more than market value and there is no savings. This is just one of the many reasons why using a professional REALTOR is a benefit. A REALTOR cannot take away the risk but they can make sure you get appropriately compensated for that risk.
The Conscious Investor
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