A brief overview of some things to consider before buying a home in foreclosure and bankruptcy

Buying-homes-in-foreclosure-and-in-bankruptcy-issues-to-be-aware-of-4In recent years, many potential homebuyers have found great opportunities pursuing homes in foreclosure. One unfortunate by-product of the nation’s housing bubble has been the unprecedented number of homes in foreclosure that are also attached to a bankruptcy. While this may have created an additional layer of potential housing bargains, caution is advised. If you’re considering buying homes in foreclosure and in bankruptcy, there are big issues to be aware of.

Buying a house as-is when purchase foreclosures in bankruptcy, you are making "as is" purchases. This means that you are buying exactly what you see, with no other expectations. There are no home warranties associated with homes purchased in bankruptcy and foreclosure. If you find out after the sale that the house has major issues, it will be your legal responsibility and obligation to remedy those problems. The previous owner cannot be held liable for any additional expenses incurred after the purchase of the home. Many homes in foreclosure are sold through auctions, which can limit your ability to inspect the condition. If possible, have a home inspector look at any home you are intending to pursue.

Buying-homes-in-foreclosure-and-in-bankruptcy-issues-to-be-aware-of-1Purchasing more debt purchasing homes in foreclosure can be a less expensive alternative to homeownership in more traditional ways. However, you should understand that you might also be purchasing the previous owner's debt. If any liens have been placed on the house, it will be your responsibility to have those liens lifted by meeting the financial obligation that has not been met. Any property taxes owed on the home will also become your debt once the purchase is finalized. Once you purchase a foreclosure in bankruptcy, any debt associated with that house becomes yours, along with the house.

Delays in some cases, homes in foreclosure and bankruptcy present a big timeline challenge, Depending on the nature of the bankruptcy, the homeowners facing foreclosure may have a long period of time to try and resolve the financial issues leading to the foreclosure. Some mortgages include remediation clauses that give burdened homeowners extensive opportunities to remedy arrears. Some newer program allow for the modification of a mortgage under protection of a bankruptcy case. You may also have to deal with multiple parties (original lenders, mortgage service companies, bankruptcy trustees, legal counsel for all involved) when pursuing a home in foreclosure and in bankruptcy.

Buying-homes-in-foreclosure-and-in-bankruptcy-issues-to-be-aware-of-3Is this right? It is very difficult for some people to feel as if they have profited from the misfortune of others. Some people feel it is unethical to do so. Many see purchasing homes in foreclosure as doing just that, especially when you combine the issues of a bankruptcy.

If you’re considering purchasing a home in foreclosure that is also part of a bankruptcy case, tread carefully. RealtyNow can help you in the process by connecting you to local real estate professionals experienced in these matters.