Hidden costs of buying foreclosed properties

Foreclosed properties may appear to be hot deals, but beware if you're bargain shopping. Foreclosed homes often come with a variety of repair and financial issues that can add up to major expenses.

Before starting your property search, make sure you know exactly how much home you can afford and your financial tolerance for the seasonal surprises of homeownership, and have an eye out for the following five foreclosure flaws.

  1. Hidden debt. A foreclosure wipes out the prior owner's private debt, but there can also be public debt against a property, like real estate tax or income tax. Before making an offer, do a thorough title search to uncover past problems that could become future obstacles.