Bank-owned properties have given homebuyers everywhere a reason to celebrate over the last few decades. They provide opportunities to obtain properties at a reduced price; a situation that appeals to both the brain and the wallet.

Unfortunately, bank-owned properties have also given many homebuyers a reason to cry. Improper research and unforeseen circumstances give way to lofty expenses that buyers may not be able to afford.

An important thing to remember about bank-owned properties is that they are often sold “as is.” This means that you cannot negotiate any property maintenance or repairs into your contract. In fact, you cannot change a single thing about the property prior to purchasing it. As such, it is imperative to follow due diligence steps prior to purchasing a bank-owned property.

Complete the following three steps before purchasing any bank-owned property in order to avoid potential tears:

Have the House Appraised

One of the best parts about foreclosed properties is that they often sell for less than what they are worth in the current market. While this seems like it’s a fantastic deal, it’s best to be absolutely sure. Sometimes the amount of work a property will require to reach “livable” status can be extremely costly.

Having the house appraised provides buyers with some of the necessary figures to help calculate the true cost of purchasing the home. As an added bonus, appraisals often provide you with a list of comparable houses in the area to better your understanding of the value you may or not be getting.

Have the House Inspected

Collect the remaining figures to help calculate the true value of a bank-owned property by obtaining an inspection conducted by an outside source. Inspectors are trained to find and report critical issues that could impact the structure and safety of the property itself.

Knowing what needs to be fixed right away versus what can wait a year or two is imperative to understanding how much money you’ll actually need to spend before you can move in.

Request a Title Search

Bank-owned properties are often foreclosed upon for a reason. More often than not, that reason is usually an inability to satisfy the requirements of a mortgage. Homes in the process of foreclosure are occasionally the subject of legal actions hastily designed to eliminate debt-pressure from the mortgagee.

Ensure the title is free and clear by commissioning a complete title search from a reputable lawyer or title company. They will check for things like outstanding liens, unpaid taxes, forgotten easements, and proper title transfer history.

These steps are often required when purchasing a home being sold through a real estate agent, but the protocol is not the same for bank-owned real estate. Researching the history and establishing the true value of a potential residence will help alleviate some of the surprise repairs that can sometimes plague these properties.