Sometimes an amazingly good deal can be found through power of sale properties; however, this is probably not the best way to go, for there are many pitfalls when it comes to power of sale properties. There are many many issues that you may not be thinking about when you first sign the purchase agreement; however, be aware of the following the things.
Sold “As Is”
With the majority of power of sale real estate, the house will be in a major state of disrepair. It could cost thousands of dollars to repair the house to something that is livable. The walls, floors, carpets, electrical, and plumbing could all require some form of repair. Before you proceed with a power of sale, make sure you have the money available for this.
Another factor to understand is that the property is sold without negotiation and without any modifications. The seller will not make any adjustments to the property before you move in. Also, all the items in the house are not guaranteed to remain there when you move into the property. This includes appliances, shelves, coverings, carpets, etc.
Also, the seller reserves the right to change the closing date of the mortgage by up to 60 days. Therefore, if the selle ris closing with you tomorrow, then the seller still reserves the right to move your closing date back an additional 60 days and quite possibly leaving you homeless. This time frame is in effect to allow the previous owner to move out successfully.
Why can they do this?
This is a legal requirement of the power of sale firm to allow the individual who is defaulting enough time to come up with the funds to reclaim the asset or to allow them to relocate properly. The seller will not make any adjustments to the property and will sell the location ‘as is’. Also, remember that the closing date can be moved. This could potentially make you and your family homeless for up to 60 days. If you are buying a power of sale, then make sure you are aware of these two key factors.
Even though these scenarios are highly unlikely, they are still possible. Make sure that you are well aware of what you are getting into before getting into the purchase. Make sure to complete a full appraisal and an inspection to confirm that it is something that you would really like to purchase. It is very likely that the price can come in at an appraised value that is less than the closing price. Most people just assume that it is a good deal because it is a power of sale, but don’t fall into this trap.
Review all the documents, do your research and search around and you may be able to find a great power of sale deal.
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