Is Buying A Foreclosure Really That Different?

Complete agree. I get calls often from buyers who want to look at Foreclosures thinking they're going to get a good deal. It's a matter of educating them, and your article does a great job!

Karen Fiddler, Broker/Owner -  Our market in Sedona is quite different than most. We have a lot of multiple home owners who can sit on a home. I did come from the Inland Empire and recall how things were back during the crunch. You make good points about foreclosures on both sides. It is all about price point. Our foreclosure market is well under $300k and I will point out the good, the bad, and the ugly, to my customer.  I have found that communication with the list agent and property owner are the biggest challenge for me.

You said it all when you said that lenders are not offering their properties significantly below market value.  If it seems to good to be true, it probably is in terms of condition.

Karen you made some very good points in this blog. 

I do not know about the banks where you are, but around here if a bank accepts a sales contract from a Borrower using FHA financing.  The bank realizes FHA will require repairs to be made to the property if the property does not meet FHA standards in order for the Borrower to obtain financing.  Since the bank will not allow the Borrower to make repairs to the property because of liability reasons, many times they will agree to do the repairs even if the sales contract was "as is".

Karen, REOs rarely are a steal in our market any longer. Saying that, I close one next week that was, but for the most part they've caught up with fair market sales, or slightly below. 

Karen, Gone are the days of getting the deal of the century on foreclosed homes. The perception with many consumers is that they are a better "deal" and for the most part, in my market, that is simply not true.  Congratulations on the Feature post. 

The perception is homes are sold for pennies on a dollar. The bank is just getting rid of it. I tell people I have a large pool of people interested. If you do not want it others will. Save every home just for you?  Sorry it does not work that way.

Foreclosed properties as you point out are not "all the same" but in our expereince...the anger of the former owners can be taken out in ways not seen until ispection...the concrete down drain...wires snipped in inconspicous places...and now time lost findng the "real house" spent on one that costs zillions to fix.

Great points!!!

Buyers who want to avoid foreclosed properties could be making a mistake as well. While it’s true that often the condition of foreclosed homes is not turn-key, they might not also be the problem these buyers anticipate

Foreclosures. Think: Vultures flying above a body dying waiting for opportunity. Today, not everything offered is eatable

It really depends on the lender, the listing agent, the condition of the home, and what the buyer is willing to put up with. I have sold several foreclosures and things went just fine. And there were a couple where it was a disaster and fell apart. Buyers need to be properly educated and guided so they know what to likely expect and so they can make an informed decision.

The perceptions can be incorrect but your last sentence sums it up nicely...due diligence!

I've purchased countless bank owned properties for clients over the years and the overwhelming majority of them may have been a little dirty and unkept but cleaned up just fine. Every once in a while it needed a new water heater or a/c unit but that was mostly when copper thieves were running rampant stripping homes of all the copper wiring and pipes. 

Karen, in our area most contracts are written "as is" so even a "normal" property is not different from a foreclosure property in that respect.  What is different is the additional paperwork that is required with the purchase of a foreclosure home and buyers need to be prepared for that.

Seems like with foreclosures that not only are there all sorts of unseen property conditions, but about one-third of the time there is a title issue that requires the deal to get extended for months.  

Distressed properties are not for everyone, especially a buyer with limited maintenance abilities.  A home purchase should always be what a buyer can afford and is willing to accept

I find that buyers are often intemidated by the overwhelming amount of paperwork that comes with REO properties.

Karen -- you make a lot of good points.  There are pros and cons when buying a home in foreclosure.  I think the "big deals" no longer exist in my market.

Hi karen,  congratulations on this features post from earlier in the week.  Its always nice to have one on the front page.

Karen, Locally distressed properties have become a low single digits portion of are market.  And some of the banks have gotten smart and actually have some work done to the homes prior to placing on the market (new carpet, fresh paint, basic cosmetics).