Like Moths to a Flame, Buyers Can't Get Enough Foreclosures
I was meandering along the walkway in my front yard the other day and my eye happened to catch a really cool sight. A furry bright red ant that had a black bad on its rear. It wasn't a small insect. It was about the length of half of my pinky. Really neat looking. Because I'm a fool for shows about nature, I know that anything bright red in color is usually sending a warning sign to stay away. Whatever this ant was, it was probably not anything I should attempt to pick up, despite being tempted to do so.
Being inquisitive, I looked up the ant online and found it. It's a Red Velvet Ant, but actually a wasp. It's sting is apparently very painful. One article I read called the females (like the one I saw) cow killers.
As a Bristow-Gainesville Real Estate Agent, I see that a lot of the cash poor buyers I come into contact with are drawn to things that they should similarly take warning from. Low priced foreclosures. Their low price is usually an indication of property condition that in a lot of cases, won't pass muster for a buyer who needs a loan. And even if it squeaked by, there are issues in below market value foreclosures that most buyers aren't considering. What's the condition of the HVAC system that hasn't been running for months or even years? Is there mold in the house? Water damage since the sump pump in the basement hasn't been powered? Does it need new appliances...again since there's been no electricity. The thought process is that they will get into the home and just take each project as it comes. That can end up devastating a family financially, especially when banks have become so stingy with home equity lines...which is what a cash poor buyer would need to finance projects.
Foreclosures priced well below market value should instantly flash a warning sign in the eye of cash poor buyers. If you don't have the cash for a down payment on a home like that low priced foreclosure that you can't get out of your mind, chances are you don't have the cash to rehab it. If it were in good condition, the bank would definitely be asking full market value.
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