Everyone is looking for a deal these days. The economy is bad, people are out of work and the real estate boom is spiralling downward. Many, many, many, many, many people I know are looking into the possibility of purchasing a foreclosed property because the price is very low. It must be a good deal, right?
Well, keep this in mind. If it seems too good to be true, it probably is. This applies to foreclosed property, too. Yes, you may be able to secure a lower than market purchase price, but there are downsides you should be aware of. First, the lender that took the property back by foreclosure is not warranting title to the house. What does that mean? It means, that you may not have a guarantee that you are receiving title to the house free and clear of anyone else's claims to it (like the IRS or the county for unpaid taxes).
So, you may be required to file a quiet title action. That's right, you get to sue everyone in the chain of title (everyone disclosed by the public records as having an interest in the house) to make your claim the primary one and wipe theirs out. That costs money.
So, beware before you decide to put down your money on a great deal.
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