With home prices skyrocketing over the last couple of years, there are opportunities to snag foreclosed properties well below their market value because they require TLC from the right buyer to bring back their luster. In preparation for a great homebuying adventure, let’s look at 5 things you should know about buying foreclosures in San Francisco:
Always Do an Inspection
The regular suggestion of having a home inspection done by a licensed home inspector stands true. However, with a foreclosed home, the extra attention to detail could save you from some serious headaches.
When you’re buying foreclosures, an inspection provides you with a wealth of information and a chance to learn about the systems and utilities of the home prior to making a hefty financial investment. Your inspector will do a cursory check of all of the utilities in the home to ensure they can operate and comply with safety standards.
It’s worthwhile to take notes during the inspection to both have a reference that you can use in a pinch as well as use for additional leverage during negotiations with the seller.
Disclosure, sometimes with Foreclosures it is not easy getting an inspection. The reason is because there might be tenants or squatters that is living in the home, which hinder at title transfers.
Also with Foreclosure sometimes it is bid on the steps of City Hall like San Francisco and would need a cashier’s check to buy immediately upon winning the bid.
Scrutinize Any Disclosures
Once you begin the process of seriously buying foreclosures in San Francisco, the seller is required by law to provide you with any applicable disclosures.
These disclosures will vary based on the local market and laws, but you can expect disclosures related to lead paint, structural issues, and natural disasters, such as flooding. Take the data contained in these disclosures to heart but continue to carefully look at all angles of the home instead of believing the disclosures at face value and moving on.
Keep in mind that any disclosures are based on the supposed knowledge of the seller, so a seller that maybe has little to no on-site experience with the property – such as a bank or private mortgage lender – often possesses a great deal of plausible deniability.
Handle the Utilities
Since you are looking to purchase a foreclosed home, there’s always the possibility that the utilities are shut off and have been shut off for quite some time.
Due to this variable, it is recommended that you call in professionals with each specific system to inspect and test each of them to the best of their ability. For instance, the last thing you want to do is close on the home and then discover major plumbing issues that have built up as pipes containing stagnant water. Other problem would be a sewer leak that happened in a bathroom and stagnant water was just sitting in the home for a long time.
Investigate Title Issues
Besides the physical condition of a foreclosed property, the red tape needs to be thoroughly examined and dealt with before closing. Specifically, a title officer needs to be brought in to discover any liens that may exist on the property. This is a very important step when buying foreclosures to make sure the title is clear.
A more common example of a lien would be fines accrued over time due to landscaping not being cared for by the current seller. The local municipality will often then call in their own lawn care company to deal with the property, and put a lien on the home that needs to be paid off before the title can be transferred to a new owner.
Remember a foreclosure could be the sale of just a single of multiple liens on the property. That means the HOA could be selling their lien and if the owner decides to pay for the lien the owner would get their home back.
Prioritize Your Repairs
From the very beginning, you will want to make note of any potential repairs that could be necessary prior to your moving in or even dealt with over time.
Planning as best you can for the investment of time and finances is key to getting the most from buying foreclosures. You can save yourself a lot of additional problems by knowing what work needs to be done and creating a loosely prioritized list of the order in which those repairs will be handled.
I would like to leave off that buying foreclosures is an advanced buying technique that would be used after having multiple experience of fixing and repairing similar constructed homes.
Help Buying Foreclosures in San Francisco
If you’re beginning the process of buying foreclosures in San Francisco and want an expert eye, contact me today at 415-830-1423!
