I have assisted numerous home buyers with the purchase of a foreclosed home. It can be a great way to pick up a nice piece of property at a decent price.
If you are in the market to buy a home and want to get one at a nice discount, keep in mind, the majority of foreclosed homes require a lot of repairs. The repairs can escalate in cost into the thousands of dollars. As long as you are able to get the home at the right price, then add the cost of repairs and the final cost outlay is still less than the ARV. (after repair value) then you just made a wise investment.
All too often, many unexpected repair items creep up during the renovation process. So, it is best that you keep this in mind when calculating the entire project.
Always have the home inspected during the purchasing process. IF the repairs are beyond your realm of affordability, then by all means, walk away. I always protect my client's within the contract that if the seller does not agree to fix the items needing serious repair, the buyer can be released from the purchase contract.
A few years ago, many sellers were severely overpricing their listings and then allowing steep discounts in the purchase process. It is quite different in today's market. Most REO sellers are pricing their homes right and many are pricing them way below market.
It stands to reason, the lower the price of a home, the more interested buyers and the more offers. This in turn can put your buyer's into a multiple offer situation and in many cases, the home sells for a lot more than the asking price.
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The bottom line here is, when looking to buy a foreclosed home, work with an experienced Realtor that has the knowledge and ability to protect your best interests!
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