5 Ways to Lose your Shirt Buying Foreclosure Listings in Northwest Arkansas
October 21st, 2008 categories: Buying a Home
Buying foreclosures can be a great way to flip properties, use as a primary residence or investment property, and build wealth. But that is NOT what this post is all about. Alot more people lose money on foreclosed properties, whether they are designated as a primary residence or an investment, than people that make boat loads of cash. Here are the things to look out for before getting into the modern day ‘Money Pit”.
Watch out for Hidden Liens, Outstanding Mortgages, and Clouded Titles. Foreclosures and bank-owned properties in Northwest Arkansas are notorious for having these problems. The real pickle of it is that most of these problems are not disclosed (or even known by the bank or agent). In fact, the abstract or title search that is done after a contract has been signed my not even pick up the more convoluted of these outstanding liens and mortgages. If they do get noticed at this point, it may delay your closing from weeks to months as the bank and title company try to sort out the details. My advice? Do your own research before making an offer on the property and head off these problems in advance.
Inspections are Great, Omnipotence is Better. A great way to lose money buying foreclosures (or any real estate for that matter) in Northwest Arknsas is to NOT have the property inspected professionally. Another great way to lose money is to assume that everything is fine with the property now that you have had it inspected. There couldn’t possibly be other things wrong with the property
that the inspector has no way of finding out, could there? What about roots in sewer lines, main line water leaks on the property, dirty furnace and ductwork, foundation problems? All these things are undiscoverable problems (and are quite normal in older properties) and may cost thousands of dollars. Be sure to cosider these hidden potential problems in your budget when making an offer on a foreclosed property.
Be Prepared for the “Long Close”. I mentioned before that problems with the property’s title may cause delays in closing. This is something that you as the buyer must be flexible on or else you must be willing to walk. Even if you are paying cash for the property you may be delayed if there is an outstanding mortgage or mechanics’ liens. What if this is going to be your primary residence? Are you relocating or renting and must be moved by a specific date? More than a few people have had to find temporary housing and spend countless dollars on rent or hotel bills. FYI, in Arkansas, any stay over 30 days in a hotel becomes tax free after the 30th day (you are refunded the tax on the first 30 days). By the way, if you find yourself in the situation to need an extended stay hotel in Northwest arkansas, I highly recommend the Homewood Suites by Hilton in Rogers. It’s centrally located, their rates are affordable, rooms are spacious and extremely well appointed, and thier staff is pleasant and friendly.
What’s the one lesson to take away from this? Do your due diligence. Do your research. Inspect your property. Expect and head off problems. Do these things and you will be on your way to building wealth for you and your family. If you have an interest in foreclosures or are just looking for a good deal give me a shout. Have you had any rough forclosure experiences that we could learn from? Submit a comment and tell us about it.
