What do I need to know about buying a foreclosed mobile home?
Friday, June 22, 2018
The first chance to buy a foreclosed mobile home is at public foreclosure auction. If you choose to bid at the auction, you will not be able to inspect the property before purchase and may not even get a chance to set foot inside the door.
Legendary deals have been had at public foreclosure auctions, but there are also a number of pitfalls if you are not an experienced public auction buyer. Properties are sold strictly “as is,” and buyer beware: along with the title, you may be stuck with any liens, unpaid taxes, or other encumbrances that must be resolved to obtain a clear title. You might also have to evict renters or squatters from the home.
Most homebuyers wait for the second chance, which comes when no bidders offer enough at the public auction to cover the amount of the foreclosed loan plus foreclosure expenses. The bank then takes possession of the property, and it becomes a REO, an acronym for Real Estate Owned.
Depending on the condition of the property and the local market, the bank may do a few repairs, some cleaning, and even install new carpet to spruce up the property. Then again, it might choose to do nothing except plant a for-sale sign in the front yard.
Foreclosures often have an amazingly low price that can be hard to resist, especially for a first-time homebuyer. But a cheap price does not always equal a good deal. It may require extensive repairs in order to be livable. If the purchase price plus the cost of repairs is less than the value of the repaired home, then you have definitely found a good deal. If not, walk away. HUD foreclosures, in particular, tend to be both really cheap and in really bad shape.
Determining what’s wrong with the home, how to fix it, and what it will cost requires a serious investment of your time. Even a mobile home that does not have damage that is readily visible may have problems related to sitting vacant and without electricity for an extended period of time during the foreclosure process—such as mold growth from a combination of minor water intrusion and lack of air conditioning, roots clogging the septic system, bacteria contamination of the well water, major appliances that are no longer functional, and damage to the belly board under the home from raccoons or other small animals taking up residence below.
See our blog post Does it make sense to buy an older mobile home and remodel it? for strategies on buying and remodeling an older mobile home. And visit our blog post What are the most common defects in mobile/manufactured home foundation piers? for some of the problems you are likely to encounter.
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