If you are looking for profitable investment opportunities in Calgary, then you should check out foreclosed properties. You can purchase, renovate, and sell such a property at a higher market rate. However, such properties also come along with their own share of risks. When bargaining, many tend to overlook crucial factors, which can lead to financial and legal challenges later. Unless you seek professional foreclosure help, you might land in a mess.
Here, you have to note the common mistakes that we are about to discuss so that you can avoid them and ensure a profitable transaction process.
- Skipping the Home Inspection
Ignoring a professional home inspection when buying a foreclosed property will lead you to the biggest pitfalls in your investment. As the name indicates, in case of a foreclosure, the property is either sold by the bank or court “as-is,” and they do not make any repairs or offer warranties. Thus, if you skip the inspection, there can be several issues that you might have to face later, such as water damage, mold, or vandalism.
Solution
You must hire a certified home inspector who will evaluate the property through every nook and corner. The report will help you to decide whether you need to bear a minor or major investment after buying. This will also save you from spending on unexpected repairs that might crop up later.
- Not Budgeting for Repairs and Renovations
A foreclosed home usually requires a good investment in its repairs, renovation, or upgrades, as the property mainly lies in unattended condition. Thus, you might often fail to calculate properly and underestimate the costs of these renovations, which can turn into a major expense later.
Solution
You might find the property in decent condition, but still try to set aside at least 10-20% of the purchase price for repairs and upgrades. Most importantly, even before you make an offer, ask a contractor to provide estimates to understand the potential expenses that you will have to bear.
- Underestimating Legal and Administrative Costs
When you purchase a foreclosed property, you not only have to pay the price of the property but also additional expenses, such as legal and administrative fees and taxes. Usually, buyers ignore these extra costs, such as the pending property tax, which later becomes a burden, as they focus only on the purchase price.
Solution
Regarding foreclosure transactions, you must hire a lawyer experienced in dealing with foreclosure properties. They can help you list the legal costs before you commit to the purchase of the property and provide you with a clear understanding of all associated expenses.
Conclusion
You can miss the opportunity to buy a foreclosed property if you don’t move swiftly, as the market is too quick. If you do not have the finances secured, you might lose out to more prepared competitors, who are equally waiting to buy the property. Thus, before you start searching for a foreclosed property, you need to get approval for a mortgage, indicating that you are a genuine buyer. Moreover, as one of the home buyers in Calgary, you need to take precautions to navigate Calgary’s foreclosure market easily.
Thank you,
Glenda, Charlie and David Cates
