Finding commercial properties at foreclosure sales feels like striking gold in today’s competitive market. After all, promises of below-market prices and high returns are hard to ignore. However, many rush into these sales and end up making costly mistakes.
Whether you represent a large investment firm or are an independent buyer, buying at a foreclosure sale demands careful consideration and thorough research.
Major pitfalls to watch for before bidding
The excitement of a good deal can make you overlook serious problems that could turn your investment into a costly error. Foreclosed commercial properties usually come with issues such as:
- Unclear ownership or title defects
- Existing debts or liens
- Ongoing legal battles
- Unpaid property taxes
- Unpaid bills from workers or a mechanic’s lien
- Environmental pollution from previous owners
All these become your responsibility after purchase. In particular, environmental contamination can saddle you with expensive cleanup costs.
How to protect your investment
Before buying a foreclosed property, you need to do your research. You can protect yourself by:
- Getting a thorough ownership check or title search
- Checking for environmental problems
- Reviewing all property records and permits
- Inspecting the property’s condition thoroughly
- Researching current zoning laws and restrictions
- Checking property tax status and any tax debts
These steps form the foundation of proper due diligence. Take note, though, that different properties may need additional research based on their history and use.
Smart decisions start with professional help
Foreclosure sales can offer great opportunities, but they also come with risks. Doing thorough research is your best defense against unexpected costs and legal problems. Consider consulting an experienced real estate attorney for advice and help with doing your due diligence. They can help you make better informed decisions about your commercial property investment.