What was true a year and a half ago is still true today. Foreclosures can be a good investment for some but it is buyer beware. Make sure you know what you are getting into before you sign on the dotted line.
I have had a lot of requests lately for "foreclosure listings". I know that there is a lot of news about how many people are in trouble with mortgages that are adjusting up to amounts they can't afford. Many of my buyer clients feel that they can get a real deal from a foreclosure. There are a few things to consider prior to buying a house that has been in foreclosure.
First, more often than not, the bank has bought back the foreclosure and has it listed at the going rate for houses that are comparable. They are not going to give away a home because it is worth more than the loan that was defaulted on. Another thing to think about is that many of these homes currently reaching the foreclosure market are worth less than the borrower owed to the bank due to the borrower having taking $ for closing costs and financing as much as 106% of the homes value at the time of purchase.
You must also consider that the people who owned this house and went into foreclosure have been in a very depressed state for a long time before the bank finally got them out of the house. Some of them are going through other personal and financial difficulties and none of them is taking care of the house the way it should be taken care of. Unless you are ready to work on a "fixer upper" you may not be the right buyer for such a property.
Another issue that I have seen a lot of in making offers on bank owned properties is that the process is slow, often someone at a distant location is handling the file and it can take a long time to get a response on an offer. Bidding wars also abound on these properties. Buying a home is stressful enough without adding to the stress by dealing with a corporate nightmare.
These properties are sold in "as is" condition and, in New York at least, there is no requirement for a property condition disclosure. It is difficult to know what lurks behind the walls or what is missing in some cases. Many defaulting owners will strip what they can from the house before they are evicted.
So yes you can sometimes get somewhat of a bargain on some foreclosures but more often than not you are just opening yourself up to a headache.
If you are looking for a home and want an agent who will look out for your best interests just let me know.
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