Thorough research should be REQUIRED if you are interested in purchasing a foreclosure. This is research that you need to have completed before the morning of the auction. Purchasing a property without doing your research can result in very unwanted and costly surprises. Keep in mind that even the most diligent research may not find all the potential roadblocks you have ahead.
So, what are some of the issues that you need to address before finding a suitable investment?
Zoning. What is your intention for the property? Check into local zoning, building, use restrictions and other controls that will affect your plans.
Title Insurance. You will need marketable title on the property. Check to make sure that the title is clear and that your property can be insured. When you go to sell your property later, the buyer will need to be able to attain title insurance on the property. If something is amiss on the title, that responsibility and consequences falls back to you.
Also, the Tax Deed you will probably receive after the auction does not warrant clear title. There may be clouds on the title that the county is not aware of or responsible for, so do your homework.
Assessments. Some properties may have special assessments, local improvements or utilities which will be due. These can range from minimal amounts up to thousands of dollars, plus interest and penalties if not paid.
Local Ordinances. Parcels may be subject to easements or restrictions, as well as other zoning or land use controls. It is your responsibility, as the bidder, to determine what restrictions, if any, apply to your parcel.
Community Association Dues. There may be Covenants, Conditions and Restrictions (CCRs) associated with the parcel. These may involved anything from maintaining the water association, roadway maintenance, all the way to the color you can paint the home and what animals you are allowed to have a pets.
Improvements. If there have been improvements made to the land, you will need to determine if those will stay with the land and how they are currently being used.
Physical Inspection. I can not stress enough the importance of visiting all properties in person that you are interested in. There are countless reasons why you need to physically see the property.
For starters, is there access to the property? Any water issues? Are the adjoining owners using any part of the property? Can you verify the boundaries? What about the condition of the building, roof, foundation, attic, basement? Have you seen the interior?
These are some general guidelines to consider before purchasing a property at auction. Keep in mind that circumstances vary from sale to sale and many will require special exceptions. This is NOT intended to be legal advice, but as a buyer beware. If you have questions regarding tax foreclosure auctions, please seek the advice of your real estate attorney.
If you are still considering heading out to the auction block, make sure you are well prepared.
If are interested in finding the true deals and saving yourself time and a headache, let me know. There are great deals in every market, you just have to know what to look for.
Jen Hudson, GRI ~ Windermere Real Estate, (360) 652-1200 or firstname.lastname@example.org