Should A First Time Homebuyer Buy A Foreclosure?

I heard a commercial the other day about foreclosures and what a great deal they were.  This commercial also touted the fact that 1^st time home buyers should buy a foreclosure. 

Well, I'm not so sure about that.  Now, everybody wants a deal, but a deal to one person could be a nightmare to another.  There are some GREAT foreclosed properties out there that are in good condition, but you have got to be choosy, look at what you are getting and don't buy just because someone says "You need to buy a FORECLOSURE because they are a DEAL"

 One thing to know is that most foreclosures are to be purchased AS IS.  That means the seller will make NO REPAIRS.  Most houses have sat empty for months without any power or maintenance. It is imperative that the buyer have a home inspection done on the property so they will know what is under the skin so to speak, however, the bank already knows that the property may need some repairs and usually prices them accordingly. You may include a laundry list of items noted as being wrong with the property; however, the bank may not even look at it.  AS IS means AS IS

The next question is, if you DO uncover something in the inspection, how will you fix it?  Do you have enough cash in your bank account to cover fixing the problem items?  Do you personally know HOW TO fix things, or are you relying on repair people that you don't know? Things ALWAYS cost more to fix than you think. Buying a house with no extra $$ in the bank - especially a foreclosure - is a bad idea.  Also, thinking that you will LEARN by going to classes at Home Depot may seem like a good idea at the time, but this gets REALLY OLD.  I've met many couples that bought a fixer upper as their first house, and of those couples, none wanted to do it again.

Now, you could be getting a fantastic deal on a property, have worked on houses since you were a kid, have a little extra cash in the bank for repairs and are ready to go.  If the buyer is getting a standard FHA, VA, or high LTV conventional loan, the condition of the property is very important. In most cases, if the house is not in average condition then underwriting will decline the loan. Consult with your lender with what repairs are needed, to determine if the property will qualify for the type of loan being sought.  

I showed houses over the weekend and several were foreclosures. There are some foreclosures out there, like the home for sale in Glen Gate above, that are in nearly perfect condition (I say nearly perfect because there is no perfect house), most need some work and others are total dogs.  Be cautious and make sure you know what you are getting into when buying a foreclosure.

Looking for a home in Hoover or the Greater Birmingham area.  There are lots of properties available.  Call me for an appointment to look at your favorites.