A foreclosure’s below-market-value price can be tempting for the bargain hunter, but buying a distressed property can be more complicated and entail more risk than going the regular home-buying route. Mary Adams, managing partner at Century 21 American Homes in Babylon, explains four “trouble spots” for buyers to consider:

1. Understand the foreclosure process
"Plenty of times a purchaser will think that the process of purchasing a foreclosure is the same as a regular home buying purchase. It is not. Contracts will read differently. 'As is' condition, and pretty much whatever the condition [of the property] is during the process and up to closing is what [the bank is] accepting, which includes leaks, foundation damage, roof situations. As a Realtor, I strongly recommend that a purchaser use an attorney who is well versed in the foreclosure process and can understand the contract’s language. The contract is being prepared by an attorney who has the best interests of the bank at hand; there may be clauses and wording that could be detrimental to the purchaser that only a [qualified] attorney could read through and protect their client.
 

2. Make sure permits are good
"The purchaser should make sure that all the certificates of occupancy, permits and variances are in place for the home before purchasing, as well as know if there are any open violations that the town has issued against the property. This way a purchaser will know what they are purchasing. The bank takes no responsibility in obtaining these C of Os, permits, etc. Again, that is part of the 'as is' condition. The purchaser’s attorney can ask for them from the bank, but whatever the bank has it will forward. Other than that, it will be the purchaser’s responsibility."

3. Inspect but don't expect
"The purchaser should understand that he or she can have a home inspection, but they must realize that there is no negotiation on the results of the report. The inspection report should be for their own edification, but not to renegotiate with the bank. The bank is already taking a loss and if there are multiple offers on the property, the bank will just move on to the next offer; there will be no consideration."

4. Be prepared to act fast
"Upon the acceptance of an offer, the purchaser needs to move quickly. The bank will require that a contract be signed as soon as possible and with a deadline date. The same will be true for a closing date. Should the bank not receive contracts within the time frame they are requiring, the bank will just move on to the next offer, unless there is some unforseeable situation, such as the contracts were sent to wrong address, etc. The bank wants to move the property as soon as possible and will not be inclined to entertain the fact that the buyer or attorney is taking their time to execute the contract."

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AP photo