| There is more involved than what meets the eyewhen | | | | any money back for such repairs. Once you have a |
| considering the purchase of a foreclosure | | | | contract, you can't get out of it because you |
| Once the realm of only seasoned real estate | | | | discovered a major defect and the bank refuses to |
| investors, the interest in purchasing foreclosed | | | | correct it. |
| properties has fanned out to a growing number of | | | | If you do your homework, however, and are smart |
| ordinary home buyers. As the sub-prime lending fiasco | | | | about the whole thing, there are bargains to be found |
| continues to push homes into foreclosure and news | | | | from time to time. Since you never know what a |
| stories appear everywhere about the record number | | | | property's true condition is by a cursory inspection, it |
| of them hitting the market, many prospective home | | | | makes sense to hire a home inspector before you |
| buyers are eyeing these properties as a way to get a | | | | submit a purchase offer. That way you will know what |
| lot of house for little money. | | | | repairs need to be made and you can then find out |
| There seems to be a big misunderstanding by the | | | | the cost to make repairs and easily determine if the |
| public, however, about the value of homes that have | | | | asking price of the house is worth the repair expense. |
| been foreclosed. People tend to think that a foreclosed | | | | A lot depends upon if you are going to live in the |
| home presents a bargain, especially those who are | | | | house yourself or if you are going to flip it or rent it. A |
| looking for real estate investment property. They think | | | | foreclosure is much more risky if it is purchased for |
| that they can buy a foreclosure cheap, do a little fixing | | | | investment purposes than to live in. |
| up, and sell it for a hefty profit or rent it out or even | | | | The more thoroughly the house is inspected and the |
| keep it for their own home, expecting to reap instant | | | | neighborhood and market researched, the easier it is |
| equity. Well, it doesn't work out that way very often. | | | | to make a decision on whether a particular foreclosed |
| Out here in the trenches of real estate, I have been | | | | home is right for you. Remember, when a house has |
| seeing an increase in foreclosed homes dumped on | | | | been vacant for a long time without regular |
| the market and the number of people looking for such | | | | maintenance, which is often the case, even a home |
| homes who are expecting to purchase one for | | | | inspector can miss damage that is not apparent, but |
| pennies on the dollar. I have home buyer clients who | | | | may be lurking behind walls and floors. Leaking water, |
| specifically want to evaluate only foreclosures or HUD | | | | vermin activity, and rot can occur in areas not visible to |
| homes, those offered by the government, usually by a | | | | even the most thorough inspection without tearing out |
| bidding process, because they want a house that they | | | | walls. These latent defects can manifest themselves |
| can buy cheaply and work on it while living in it. As it | | | | at anytime and cause extensive damage. Consider |
| turns out, most end up buying a conventional home | | | | also that many foreclosed homes were neglected by |
| once I show them a couple foreclosures and they | | | | the previous owners, adding to the possibility of |
| begin to understand what they are up against. | | | | unforseen problems. I see this out here in the field all |
| Banks are not stupid. They know the value of real | | | | the time. |
| property and are not about to give it away. It's an | | | | If you are determined to buy a foreclosed or HUD |
| asset to them, not a liability. When they have to sell a | | | | home, do your homework. Work with a competent |
| home that they have repossessed, they offer it at | | | | real estate agent and know the real estate market, |
| market value, not necessarily for what is owed on the | | | | the condition of the property, and the cost to make |
| house. The first thing they do is send a certified real | | | | repairs. No matter what your objectives for buying a |
| estate appraiser to the property to determine a fair | | | | foreclosure are, get the facts. That bargain property |
| market price based on comparable homes sold in the | | | | could turn into your worst nightmare. The old adage of |
| area and any defects that may be present in the | | | | "Buyer Beware" certainly holds true when it comes to |
| home. Whatever figure the appraiser comes up with is | | | | buying foreclosed property. I could tell you horror |
| what the house will be priced at. And it isn't cheap. | | | | stories. Stay tuned. I may relate a few in future articles |
| It is true that many foreclosures are priced lower than | | | | here. You can get some helpful information on the |
| seemingly comparable homes in a given area, but they | | | | subject for free at one of my favorite real estate |
| are almost always in very poor condition, sometimes | | | | websites, . |
| requiring extensive repairs. And this is where the | | | | There are going to be more foreclosed homes coming |
| danger comes in. Foreclosed properties are sold "as | | | | on the market over ensuing months and there will be |
| is", meaning that when you buy the house, you have to | | | | some excellent pickings if you know how to spot and |
| take it in it's present condition, the way you see it. You | | | | properly evaluate them. Move fast when you do find |
| can have a home inspection, but you can't ask the | | | | one. You're not the only one eyeing that property. |
| bank to make any repairs to defects found or credit | | | | |