When Is A Foreclosure Not A Bargain???

Real Estate Agent with S & L Properties

Regularly, our agents receive calls about foreclosures at the beach.  We just don't have that many near the water and our short sales are not as plentiful as they once were.  I happen to own some property in North Myrtle Beach in a gorgeous community (Sunset Harbour) on the waterway.  This is a community with homes from upper 200,000 to upper $2,000,000.  When the Stones first developed the property, they wanted an upscale community for professionals and their families.  With the boom we experienced a few years ago, people were buying lots and homes who truly could not afford to live in such a neighborhood; thus, when the market failed, several properties went into foreclosure and short sale status.  One home in particular, the owner ran out of money building the home.  After the foreclosure process was completed, the bank put the property up for sale.  It was purchased for lower $300,000s.  Now, I want you to keep in mind there were a few properties on the market in the $500,000s and $600,000s but they wanted what they wanted so they bought an unfinished home so they could "Make it their own."  Guess what?  Over $200,000 has been spent on the house; it is not finished; the new owners are out of money.  I have seen this scenario play out up and down the beach.  The new owners never realize how much "Making it your own" is going to costs.  I have heard several owners say they would not do it again.  A few have been caught because they didn't realize, you and your buddy can't just do the work.  The inspectors in our area are very aggressive about homeowners not having permits, and there is a movement that agents maybe required to verify that new additions had a permit before listing for sale so that "Super Buy" may not have been such a great deal after all.

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Nancy Williams
Coldwell Banker Homestead Group Select Professionals - Harrisburg, PA

Linda, you make some really great points.  While many times buyers will overestimate what it will cost to fix something up, it is equally dismaying when a buyer underestimates how much it will take to put something in shape.  Foreclosure properties have often had so much deferred maintenance, and it takes a lot of dollars in that aren't necessarily dollars out to cure all that needs done.

Apr 19, 2010 03:42 PM #1
Terry Adams
Condolux Real Estate & Vacation Rentals - Myrtle Beach, SC

So true Linda!  Landscaping for instance can be a boatload of cash and that's just the exterior.  Some just fail to realize that even after school, we still have homework to do before a major investment such as homes.

Jun 29, 2010 06:49 AM #2
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Linda Hinson

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