3 Things You Didn't Know About Foreclosures

If you've ever been exposed to the real estate market, you're probably familiar with the term "foreclosure." A foreclosure occurs when homeowners fail to make the necessary payments on their mortgage loan, and the bank repossesses the property as collateral on the loan. When this happens, the bank typically either auctions the home off or puts it on the market like any other property for sale. Foreclosed homes can be enticing options for buyers because they are often priced much lower than other comparable homes on the market.

Foreclosures are not always as benign as they may seem, however. Here is a quick look at some of the things you may not know about them, courtesy of the team at our Lake of the Ozarks Title Company.

Foreclosed Homes May Require More Expensive Repairs
Because the property owners were unable to pay for their mortgage payment, they were likely unable to pay for any repairs and/or upgrades to their home as well. When other homes are put on the market, the owners put a great deal of time and resources into fixing up the home so it is in prime selling condition. When foreclosed homes are put on the market, however, they are typically listed as-is. The new buyer will probably have to pay for any desired repairs or upgrades out of their own pocket.

Foreclosed Homes Tend To Appraise For Less
Homes that have been foreclosed upon generally sit empty for several months (or several years) before new owners move in. During this time of vacancy, the home may not receive very much attention, and things may fall into a state of disrepair. As a result, foreclosure homes generally appraise for less than other homes with comparable features. Remember that your financing will be dependent on the appraisal value of your home, so this low appraisal value may hurt your ability to get a large home loan.

Property Liens Are Not Necessarily Eliminated
A property lien is placed against a property when the owners fail to make necessary payments on any number of things, such as utility bills, home repairs/construction, or child support. A home that has been foreclosed on may still have liens attached to it, and the new buyers may be financially responsible for paying off these liens if they are not addressed before closing. 

Do Your Research!
It is important to do your homework and learn as much about the foreclosed home as possible before you buy. A home inspection will be a big part of the process, as it will give you important insight into the current condition of all major aspects of the home. The title search can also help you uncover any outstanding liens against the property.

When you are ready to buy, we hope you will keep us in mind for your local title insurance company! We have experience handling transaction on foreclosed properties and would be happy to assist you in the process.

The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!

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750 Bagnell Dam Blvd Suite B
Lake Ozark, MO 65049


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