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Are there risks involved in buying foreclosure properties?

You should be aware that foreclosure properties are sold caveat emptor, or "buyer beware". It can be a risky investment for inexperienced buyers. Foreclosure investing has many disadvantages. A title search needs to be conducted before purchasing the property. Foreclosure will not eliminate past-due property taxes or liens, and the purchaser will be obligated to those debts. It could be that the second mortgage was foreclosed, and you're taking the property subject to the first mortgage. Sometimes and quite often utility bills will also be the obligation of the purchaser.

The property's physical condition is not well known, and often an interior inspection of the property is not possible before the auction or purchase. In addition, foreclosure sales are exempt from most provincial disclosure laws.. That means that neither the owner, foreclosure attorney, lender, government agency, nor their agents are required to do any property repairs. You should therefore expect and be prepared to do repair or maintenance, either by yourself or by hiring a contractor. It is important to arrange for your financing prior to your foreclosure purchase. Then you can bargain with the owners from a position of strength. Contact your lenders or partners to negotiate and settle on the terms and conditions of your financing so that you will be prepared to complete the purchase once you have negotiates a deal with the owners.

This series of articles is brought to you by A. Mark Argentino and other real estate related resources, including Canadian Real Estate Association CREA and the Ontario Real Estate Association OREA. Back to list of Real Estate Helpful Articles

Whether you are interested in a Power of Sale Property, a Foreclosure Sale or a regular property purchase, I can assist you with all of the complexities when you purchase or sell your next property.  Please don't hesitate to email me If you have any questions or require further information, please send me an email. Thank you, Mark Argentino Read about Power of Sale, Bank Sales and Foreclosure Properties FAQ's Read a very detailed section about Power of Sale and Foreclosure or go back to list of Real Estate Helpful Articles