Before you decide to purchase a house acquired through foreclosure it is important for you to consider your goals and resources. Some of these homes need minor repairs while others have suffered from years of neglect and deferred maintenance. Not all foreclosure properties are a good deal and those that are usually end up selling for more than their list price.
1. Do you have the resources to repair the house?
Buyers usually underestimate the cost of making repairs to a home. The seller is not going to repair any items found during the building inspection. The inspection is for your information and will help determine whether or not you want to purchase the house. Can you afford your mortgage payment, living expenses and the costs for repairs? Some repairs will have to be made before you can move in to the property and there are areas where only licensed professionals can complete the repairs.
2. Are you looking for a deeply discounted home in a great location?
Many buyers are looking for the $500,000 house for $225,000 or the $150,000 house for $65,000. They are out there, but if you come across one, expect the property to need significant repairs. You are not going to find a move in ready or cosmetic updates only in a house that is priced significantly under the market value for the neighborhood.
3. Do you have the time and patience to purchase a foreclosure?
Houses that are owned by a financial institution require a knowledgable agent and a great deal of patience. If you are looking for a great deal in a specific neighborhood you are probably not alone. Once you find your perfect property be assured there are several other people who also think this is the perfect place. You will then be in a bidding war with other buyers and depending on the condition and location of the house the sales price could be tens of thousands over the original asking price.
Finding your perfect house is tough enough, finding your perfect foreclosure house requires lots of time. Once you have found the house then there is the wait for a response from the seller, this can take up to 10 business days. Closing can be delayed by title issues that are discovered at the last minute, so even though your house may be in move in condition, always have a back up plan in case your closing is pushed back.
4. Do you have to have a foreclosure?
There is a misconception that all foreclosure properties are good deals and all privately owned properties are not. There are many houses for sale by private sellers that are as good, and in some cases better, deals than a foreclosure. Don't let the fact that a house is a foreclosure cloud your judgment and make you think it is always the best deal in the neighborhood. Once you factor in the time and effort required to locate, purchase and repair a distressed property the non foreclosure property could be a better investment.
If you are looking for a home of any type, please contact me any time for a free, no obligation consultation.