Just about every client that I meet with now days ask me the question, should I consider buying a foreclosure? Without question, there are some great stories about people getting wonderful deals on foreclosures, but there are just as many stories of people ending up with an unfinished house and no money to finish it.
The process of selling foreclosures has changed over the last year. Before that, most banks would take foreclosures to the court house steps and have an absolute auction. This meant that the highest bidder wins. The downsides are that you rarely are able to inspect or even see the house before the auction, you have to put down 10% at the auction, and you had a limited number of days to close on the property.
Court House Auction
· 10% Down (often non-refundable)
· No Inspection
· Typically Buyer is going in with limited knowledge on property
With the increase in foreclosures, banks have seen increased the number of homes that they put into the hands of realtors. This does allow you to view the property before hand and even have the opportunity to have a home inspection, but in general you are paying more than at auction, hence why banks do it.
Bank Repo's with Realtors
· Typically 1% down
· Allowed to view before making offer to purchase
· Buyer permitted to have Inspection
· Offers are typically required to be As-Is (no repairs)
· Generally need some repairs
So should you consider a foreclosed home? A lot of it depends on the client. Are you financially able to make repairs if they are needed? There are very few of these properties that are left in pristine condition. Do you have the cash to make these repairs?
Common needs include:
· A new heating and air system
· New flooring throughout most of the house
· Replace a roof
· Electrical issues
My personal belief is that foreclosures, especially at auction, are meant for investors with capital to make the repairs. First time home buyers often find themselves overwhelmed by the amount of work and the cost required to fix up one of these homes. Don't let get fooled by a tv show.
This Blog is written by:
Nick Ratliff, Realtor
Keller Williams Bluegrass Realty
Nick@FindMyKyHome.com
Your Center for Real Estate Information
www.FindMyKyHome.com
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