Buying a foreclosed home from a lender may also be a disappointment. Because of the number of mortgage loans for 100% of the property cost that were written in the seller’s market, many of the foreclosed mortgages are for more than the property is worth. Since the lender wants to get as much money out of the property as possible, the price on the foreclosure may not be as much of a bargain as you would expect. This is not to say that you will not save significantly on the price, because you will. The problem comes in the cost to fix or rehab the foreclosed property.
This brings us to the major issue in buying foreclosures, the condition of the property. You get the home in the condition it was in when it was originally taken away from the homeowner. With predatory lending and all the other problems during the seller’s market, many people who were not financially qualified to handle mortgage payments were given mortgages. Just as the lender made errors in giving the mortgage, the foreclosure may also be a result of errors and unfair tactics. Homeowners who feel that their property is being wrongfully taken from them can take retribution on the property, destroying almost everything.
Even the most conscientious homeowners, when told that they will lose their home, may do things like sell light fixtures, bathroom fixtures, plumbing, appliances, and even the kitchen cabinets before a foreclosure sale. At bare minimum it is highly doubtful that a homeowner who is unable to make the mortgage payment will have sufficient funds to be able to fix anything that breaks in the home.