Want to Buy a New Jersey Foreclosure? Here's What You Need to Know

New Jersey has its share of foreclosures, and they represent a good buying opportunity if you aren't in a hurry to close.  But beware - they aren't without their problems.  Here are some items you need to consider before you decide to write a purchase contract on a bank-owned home in Mercer County, NJ.

1. The highest-risk option for buying is at a foreclosure auction.  You may not have had a chance to inspect the property, and almost always will be bidding against the lender, who knows their bottom line (you won't).

2.  Most foreclosed properties are sold as REOs, or "real estate owned" by the lender, which is not in the real estate business (or wasn't) and presumably wants to sell.  Remember, the bank took over the property from an owner who did not pay, and most likely in an adversarial transaction.  The Bank has no legal obligation to disclose anything, and probably knows nothing of property defects anyway.  Buyer beware!

3.  Any inspections are up to the buyer, at his/her cost.  At the minimum, you need a homeowner's basic inspection, and to follow up any additional recommendations for supplemental inspections, such as of pests, roof, or pool.  Many properties in Mercer County are on septic tanks and you need an inspection of the tank and drainage system.  You must factor these costs into the cash you need to purchase, and they can save you thousands of dollars in repairs later.  If you can't afford to pay for inspections, don't buy a foreclosure.

4.  Once you have a good understanding of the problems with the home, realize you will be buying "As Is."  Very rarely will a bank make repairs.  Don't expect them to agree to do anything except give you clear title.  Plan to take possession in the condition you found it when you made your offer, and be prepared to make the repairs yourself.  The only exceptions will be health and safety issues, such as something structural or a gas leak or unsafe electrical condition.  If you can't afford the repairs and investments (like buying appliances) to make the property safe and livable, don't buy a foreclosure.

5.  The bank will control the contract terms and the timeframe.  Be very aware of the time limit you have to opt out of the contract and why.  If you find unexpected problems or find they will cost more than you want to pay to repair, be sure you act quickly enough to get out of the contract.  If you don't, you will forfeit your deposit.

6.  You can continue to look at other properties after you have made an offer.  The bank is looking at many offers while you wait to hear.  So don't be in a hurry, and keep your options open.

Yes, you need an experienced Realtor working for you if you decide to buy a foreclosure.  I've been in real estate in Mercer County for more than 20 years.  Don't think you can blunder through bank requirements and paperwork without a professional on your side.  Call or email me and let's talk about what type of purchase will fit your investment strategy.

Joe Giancarli, SA
Real Estate Advisor
609-658-2612
jgiancarli@remax.net
http://www.joegiancarli.com/
http://www.njhomesource.com/