When buying a bank foreclosure there are many things you need to watch out for. Lucky for you I have encountered many of them and they so happened to be present in House #7! What better way to illustrate my point than with the “before” pictures of the house.
Probably the most important thing you have to keep in mind when buying a home after foreclosure is that it comes with no disclosures or warranties. This means the house can be falling apart and be infested with mold and the bank will neither tell you about it nor accept responsibility for it.
You need to keep this in mind when buying a bank foreclosure because you need to find all those faults, and although the bank will not fix them, you need to budget them into your list of repairs. Whether it be an investment property or a house for you to live in you want to make sure that this purchase makes financial sense.
Allow me to illustrate my point with House #7:
The outside don’t look “too bad”. Rotted fascia boards, gutters that have not been cleaned since 1995, and some need for landscaping. This siding is aluminum so although you can paint it if try to pressure wash first and see how it comes out. Aluminum siding, although not energy efficient, can last for a very long time if properly maintained.
Living room. Carpet has to go and will be replaced with hardwood floors. If you are thinking of reselling then adding some base and crown moulding will help.
Outdated dining room colors and fixtures.
Foyer floor was covered in Parquet. Although it was in good condition, it’s such an outdated style that it had to go.
Original kitchen from when house was built in 1983. Obviously for a house you are going to flip, the kitchen has to go but if you were to consider making this a rental property and leaving the cabinets they would need a thorough professional cleaning since they were covered with a light layer of mold!
Changing the layout of the kitchen will also be a good idea. Having the stove at the far end made for a cumbersome layout.
Master bedroom opens up into a smaller bedroom that could be used as either a big closet or a nursery, even a small office.
Master bath. The tile in the shower had cracked over the years and the grout was gone in some places which caused water to leak into the downstairs ceiling and rot the studs behind the shower. This damage was not visible I suspected it when I saw the tile and then confirmed it when we actually removed it.
Finished basement. Here in Atlanta basements are always a plus but this one came with a catch…
This is just one of the areas that was covered with mold in the basement. Apparently there had been a leak from a bad gutter that let water into the basement and then nature does the rest. Of course, the bank had “no knowledge” of a mold problem at this property.
Nice back deck in desperate need of paint and cleaning. When you come across a deck make sure you look at the supports and footings. I have seen a lot of half baked decks built very poorly I even had to tear one down completely. At a minimum, with decks, I always expect I will have to fix all the footings to make sure there is no wood to ground contact and they are set in cement.
You can see the bad gutter right in the back on top of the porch. That gutter alone caused the roof on this porch to rot and then forced water into the basement which then caused the mold. The irony here is that a $10 downspout extension would have prevented all of it.
This roof is several years past due replacement. I even think it’s the original roof for the house, 20+ years old! You can tell from how worn these shingles are and the water spots in the ceiling inside the house.
Buying a bank foreclosure is not for everyone. However with some knowledge and consulting with the right people you can land a really good deal. Just make sure you don’t rely on the bank or the listing agent information and do your due diligence when buying a bank foreclosure.