Real Estate in Toronto: Should You Buy a Foreclosed Home? by:Robert Kennedy
The decision to purchase a home is not one that should be taken lightly. Buying a house is a long-term investment that will affect your finances negatively and positively for the rest of your lifetime. With this in mind, you should always maximize your investment potential when you purchase a home. Look for the best deal. Purchase property in a neighborhood where property values are on the rise.
You have probably heard that there are a lot of bargain-priced homes on the market right now. This is especially true if you are thinking about buying a foreclosed home. In some cases, foreclosed homes sell for as much as 50% less than their market value. But before you go right out and buy a foreclosure, there are some points that you should consider:
A lot of foreclosures are located in economically depressed areas and areas where job loss has greatly impacted the local economy. Sure, there are foreclosures in affluent communities as well, but they are fewer in number. Buying in a depressed area could negatively affect the value of your home and your ability to pay for it. It might even affect your ability to refinance and/or sell in the future.
Houses are foreclosed upon after people are unable to pay for them. If a home loan has defaulted, you can almost be sure that the land taxes are not paid up to date. In some cases, back taxes transfer with the house. You could end up having to pay the bill.
In a similar vein, foreclosed houses are often in disrepair. People do not lose their homes overnight. They do so after a long economic struggle during which repairs are not being made. Much of the foreclosed real estate in Toronto is in need of major repairs. In all likelihood, you will be responsible for making such repairs. The bank has already lost money on the home and will probably not want to invest any more.
If you buy a foreclosed home at auction, you might not be able to see inside it let alone have any professional inspections performed. You might find that there are major issues with the home after you have purchased it.
Again, foreclosures can be a great deal, but there is a chance that you will end up spending more money than you planned if there is something wrong with the home. Be sure to ask a lot of questions and leave no stone unturned when purchasing a foreclosure. And do not be afraid to ask questions. Knowledge is power especially where foreclosures are concerned.
The decision to buy a foreclosed home is a personal one. However, having all of the facts greatly increases the chance that you will make a wise decision and keep more of your hard earned money in your pocket. The bottom line: Never buy real estate in Toronto without doing your homework first. Look before you leap!
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