Protect Yourself When Buying a Foreclosure

Q: We are buying a house from an investor that buys homes after foreclosure and fixes them up. Is there anything extra we need to do to protect ourselves? — Kay

A: Yes. This is a popular investor strategy in South Florida and other areas hit hard by the housing crash. This can work out very well if it is properly done, resulting in a profit for the investor and a reasonably priced, newly upgraded home for you.


However, you as the buyer are smart to be extra cautious due to the dangers of both buying a foreclosed property and construction in general.


You will need to carefully review the title insurance commitment to make sure that the foreclosure was performed and concluded properly and that all issues have been cleared up. You will need to go to the city and county and make sure that all permits were properly obtained and closed out, both from this renovation and any from the previous owners. Make sure there are no code enforcement issues and that the homeowners’ association is paid up and the renovations are in compliance with community guidelines.

Pay particular attention if there are any additions to the house, making sure that they were permitted and are up to code. When the renovation is complete, ask for proof that all of the contractors and subcontractors were paid in full.

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