Invest in a Home Inspection
Before you jump into a purchase, get to know the property. For a nominal fee, a home inspector will provide a thorough assessment of the structural, mechanical, and other major components of the home. After you have a clearer picture of the house's condition, you'll be able to either plan repairs accordingly or, if the house seems to be more trouble than it's worth, simply walk away.
Learn About the Home's History
If you've ever sold a house, chances are you had to fill out a Seller's Property Disclosure Statement. The SPDS discloses to a buyer the history of the home's maintenance, repairs, and additions. When the bank owns a property due to a foreclosure, however, there will be no SPDS. The absence of this important historical context makes a thorough home inspection especially crucial; it may be the only way to find out about changes made to the property over its life.
Related: 7 Ways to Trace Your Home's History
If you're purchasing a home that has been unoccupied for several months, the first thing to ask is whether the utilities are switched off. In much of the country, it's common to drain the pipes to prevent freezing, but you'll want to pressure-check and energize everything prior to a home inspection. Each municipality has its own rules about these details, so check with your real estate agent for referrals.
Spot Plumbing Problems
The most serious problems found in foreclosed homes are often caused by broken plumbing pipes or leaks. What may at first just seem like a shoddy bathroom repair can lead to rotted floors or walls that could cost thousands to replace. Get a sense of the situation before you commit. Check faucets for water pressure, inspect the ceilings and baseboards for water stains, and look for signs of mold and mildew, which can be indicators of plumbing problems.
Investigate HVAC Systems
When dust and debris accumulate in the ductwork of an abandoned home, it's bad news. The same goes for boilers and furnaces, which can deteriorate under humid conditions. Before you can test the operation of appliances, you'll probably need to set to work cleaning and repairing broken or damaged parts.
Related: How To—Clean Any Appliance
Look for Signs of Deferred Maintenance
When owners stop taking care of their homes, they're leaving the eventual buyers with lots of maintenance issues to address, from gutters that need cleaning to overgrown vegetation that needs pruning. Keep an eye out for cheap repairs like duct tape patched over leaky pipes or electrical wiring. These shoddy fixes—indications of cutting corners—can lead to water damage, mold, or fires, and may require costly repairs down the line. Call a trusted handyman to resolve any hazardous issues.
Check for Expensive Fixes
Don't let big-ticket repairs take you by surprise. Bad roofs or foundation cracks can ruin a home, and damage to other outdoor structures can cost thousands of dollars to fix. For a house with a pool, contact appropriate professionals to ensure the underground piping and equipment isn't cracked or clogged.
Related: 7 Signs You Need a New Roof
Conduct a Sewer Scope
For homes more than 20 years old, a sewer inspection can help head off problems down the line. Common sewer issues for older homes include tree roots growing into the line, or lines that are otherwise rotted, clogged, or broken. Have a plumbing company scope it out by snaking a video camera through the line to determine its condition.
Resolve Any Liens
Many municipalities regulate the maintenance of a property, which means that after a foreclosure, if the bank isn't keeping up on seemingly small tasks like mowing the lawn, there may be a lien placed on the property. Issues may also result from unpaid contractor fees or utility bills. Prior to closing on a property, double-check that all liens are thoroughly investigated and resolved by you and a title officer.
Rekey All the Locks
Your home is most likely your largest investment. Home insurance is a valuable way to protect the investment, but could you save money on your home insurance policy? Read our top tips for how to safeguard your property while saving money.