Buying a foreclosed property can be a lucrative investment, but it does come with some risks. The most obvious, and perhaps the most concerning, is the chance that there will be some severe construction problems down the road. Home renovations and repairs are expensive, and it is unlikely that the owner kept up with those repairs if they were unable to make their mortgage payments. If you’re looking to purchase a foreclosed home “as is,” here are the construction problems that you are most likely to encounter.
A foreclosed home may have a lot of general structural damage such as cracks in the walls, cracks in the foundation, water damage, and sagging floors. All of these issues cost a lot of money to repair, and they might not be apparent without a thorough inspection. They can significantly impact the value of a home and even make it unsuitable as a residence.
A Damaged Roof
The roof on even the most opulent of homes is vulnerable to damage. A roof with missing shingles or one that leaks will greatly affect the chances that you will be able to sell the house. If you’re lucky, the roof is in relatively good condition and will only need minor repairs. If you’re not, you will have to replace the entire roof, something that can cost thousands of dollars.
When you inspect a foreclosed home, make sure to look for charring around electrical outlets or loose wires. Faulty wiring is very common in foreclosed homes, especially in older houses that haven’t had their electrical systems updated in some time.
Poor plumbing isn’t as common as bad wiring, but it is still something that comes up in foreclosed homes. Leaky or burst pipes may cause water damage in the ceilings, floors, and basement. Even if there aren’t any leaks to speak of, you still might find that the plumbing in an old home consists of incorrectly sized pipes or substandard materials that will need replacing before the home can be sold.
Old HVAC System
HVAC (Heating, Ventilation, and Air Conditioning) systems typically live to be around 15 to 20 years old. Technology advancements like energy efficiency and smaller, quieter units can make these systems expensive to replace. Always check the age and condition of all parts of an HVAC system before purchasing a foreclosed home.
While none of these problems are necessarily deal breakers when it comes to buying foreclosed homes, you should repair them before you list the house with a realtor to avoid facing lowball offers or contingency agreements later on. Always remember to have any potential investment properties thoroughly inspected before buying them, and factor any repair costs into your final price tag.