Are Foreclosure Sales (Bank Owned Homes) REALLY The Best Deals?
Sometimes they are. Some bank owned homes are in pristine condition. Sometimes. Most of the time they are rough. Often times they are not mortgageable. Often times once you pay cash (money that is not making money elsewhere) and then you put cash into the house to make it livable you end up with a nice house with the same amount of money into it as the regular or non distressed sale you passed up because it "cost more."
Some of what you need to consider before ruling out non-distressed homes:
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What type of mortgage do you qualify for or do you have all cash?
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Will you have the cash after the purchase to complete the repairs?
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Are you going to use a builder or do the work yourself and are you ready to disclose at re-sale that you did all or most of the work yourself?
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What dollar value do you put on your time?
If you are getting a conventional mortgage remember the house will need to have a working central heating system and running water. Don't bother looking at a house where the kitchen was removed.
If you are an FHA buyer the house needs to be in decent shape- livable.
If you are an FHA 203K buyer you will be able to finance the repairs, BUT you will need a licensed builder to draw the money for the repairs. If you are paying a builder, are you really any farther ahead than buying a home that has been maintained?
I'm not saying that fixers are necessarily bad, but too many consumers today seem to think there is all this sweat equity to be made on buying distressed properties and for the most part that is simply not true.
Do You Really Want to Buy a Fixer?
The Perfect House- Does it Exist?
How to Figure Your New Property Tax
A Tale of Two Taxes- How Property Taxes Affect Your Buying Power
Jackie Hawley
Keller Williams Realty, Clarkston MI
cell: (248)736-6407
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