We have had a lot of buyers call us wondering about the REO market and finding a "screaming deal" in a foreclosure. We have several in our market, so there is a good selection. The other night I was going over some old blogs that I have commented on and saw some of the damage that people that are losing their homes do to those properties.
I have to wonder, is it really a better deal to buy an REO from a bank or HUD not getting a complete disclosure of property conditions from them versus buying from someone that has equity and may be priced around $10K more than a REO? There are property inspections that need to be done regardless of who you buy the property from. I honestly believe and preach that a home inspection by a licensed inspector is just the cost of buying a house. It is well worth the cost of the inspection.
There are defects that come inside homes that the inspector may comment: living room needs to be repainted, or linoleum flooring in kitchen needs to be replaced. These types of defects or problems are deal breakers in any sense of the word. However if you have a REO that needs to be repainted and the linoleum is showing a lot of wear and tear, and the carpets need either a real good cleaning or to be replaced. It doesn't take many of these items in an REO home to make up the difference in price in a resale home that shows a lot of pride of ownership.
Landscaping is another area that can make up the cost difference in a hurry if a REO has allowed the lawn to die, or the landscaping is either non-existent, or has been torn up; (Non-existent landscaping especially in the back yards is common in foreclosures in our area) and you are comparing that home to a home with well maintained landscaping, there is a cost or value there. I guess what I am really trying to say is that it is our job as Realtors to make sure that our clients understand that value is a lot different than price in some cases.