What do you mean they took the toilet?: How much do you know about foreclosed homes?

By: Staff
Image: refer to hsw

About This Quiz

With so many foreclosed properties on the market these days, more and more people are curious about what they need to do to buy these repossessed properties. Take this quiz to see if you're ready to purchase a foreclosed house.

It's best to start looking at foreclosed properties when?

Experts recommend you get preapproved for a mortgage before you start looking at properties seriously. This way, when you find a house you love, you'll be able to act quickly and not wait on a lender to check your credit and assets.

True or false: Buying a foreclosed property is always a good investment.

Not all repossessed properties are good deals. You'll want to do some research before you buy a house to make sure you're making a good investment. For example, if you want a property that will increase significantly in value, you're better off looking for a house in a neighborhood without many foreclosures.

Before buying a foreclosed property, it's a good idea to do what?

Real estate agents experienced with foreclosures can help you determine whether you're getting a good deal, and they're familiar with the kind of paperwork that goes along with buying bank-owned homes.

Where can you buy foreclosed homes?

If you enjoy high-pressure situations, you may want to consider purchasing a property at a courthouse auction. If you'd rather inspect the home before buying it, you'll probably want to buy from a bank or other mortgage lender.

True or false: Foreclosed properties are almost always in good condition.

The state of foreclosed properties can vary dramatically. Some banks pay to have repairs done before putting the homes on the market, but many do not, so what you see is what you get.

What should you always do before buying a foreclosed home?

If you discover that the house has been on the market for a long time, you may be able to negotiate a lower price with the bank or mortgage lender who's selling it.

True or false: You'll always get the best deal on a foreclosed house at an auction.

While you might get a great deal at an auction, bidding on a home doesn't guarantee that you'll save money. Before attending an auction, you'll want to give yourself a bidding limit so that you don't end up spending more than you intend or can afford.

What government agency sells foreclosed properties?

The U.S. Department of Housing and Urban Development (HUD) sells properties that have defaulted on Federal Housing Administration-backed mortgage loans. There's a database of HUD homes for sale in all 50 states.

Buying a foreclosed house is only worth it if you intend to flip it.

People buy foreclosed properties for all kinds of reasons. You don't have to flip a home for it to be a good investment for you.

Buying a foreclosed property is easy even if you have bad credit.

Mortgage lenders want to know that you'll pay them back, so they typically prefer giving loans to people who have good credit -- no matter what kind of property you're buying.

What may be damaged or missing in a foreclosed home?

There's nothing guaranteed when it comes to foreclosed homes. These properties were repossessed after the former owners couldn't afford to make their mortgage payments, which means general home maintenance and repairs were also often neglected. Plus, some former owners are so upset with the situation that they purposefully damage, destroy or sell parts of the home -- like appliances, plumbing pipes and toilets -- before moving out.

If you want to flip a foreclosed property, you'll be able to make more money if you do what?

If you're buying a foreclosed home to make money, go for a cheaper house. Expensive upgrades (like putting in a pool) don't give you nearly as much of a return on your investment as fixing a crack in the foundation does.

True or false: If you buy a foreclosed property, there's no need to get an inspection.

Always get an inspection, regardless of whether you're buying a foreclosed property or not! When it comes to foreclosures, however, an inspection will let you approximate the total cost of the home by budgeting in extra money for the cost of any repairs.

When looking for an inspector, find one certified by what?

The American Society of Home Inspectors certifies men and women to inspect houses.

True or false: Because foreclosed houses are often affordable, you should always buy a home rather than rent.

Buying isn't always better than renting -- it depends on where you live and what kind of long-term investments you can make. If you're unsure whether buying a house is a good decision, consider talking to a financial adviser about it.

True or false: Verbal agreements are just as valid as written ones when buying a foreclosed property.

When buying a house, you want all of your agreements to be in writing. A seller doesn't have to honor a verbal contract, even if you think he should.

If you're interested in becoming a professional house flipper, you should start by doing what?

Don't get carried away with buying properties if you're just starting out as a house flipper. These investments can quickly lead to bankruptcy if you're not careful or financially prepared.

If you love DIY projects, ___.

Buying a house gives you the freedom to make the improvements you want to make. If you love DIY projects, buying a foreclosed fixer-upper might be right for you. Just make sure you have a budget for those improvements when you buy the house.

True or false: The price listed on a foreclosed property's for-sale sign covers the total cost of buying the home itself.

Buying a house involves more than just the price on the sign. You might be able to negotiate a cheaper price for the property, and you'll definitely have to pay an assortment of fees before the house is actually yours. Know what fees you'll be required to pay beforehand so that you know what you're getting yourself into financially.

Before buying a foreclosure property, you want to make sure of what?

When buying a repossessed house, you'll want to do a title search to see if there are any other strings attached to the property. The previous owners may have had more than just a mortgage they couldn't pay, and you may be on the hook for delinquent homeowner's association fees, second mortgages and other hidden costs.

About HowStuffWorks Play

How much do you know about dinosaurs? What is an octane rating? And how do you use a proper noun? Lucky for you, HowStuffWorks Play is here to help. Our award-winning website offers reliable, easy-to-understand explanations about how the world works. From fun quizzes that bring joy to your day, to compelling photography and fascinating lists, HowStuffWorks Play offers something for everyone. Sometimes we explain how stuff works, other times, we ask you, but we’re always exploring in the name of fun! Because learning is fun, so stick with us!

Explore More Quizzes