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Myth #7 Foreclosures are the best deal.

This is a continuation of a series: 10 Common Myths Shared by Homebuyers.* See Myth #6  here. 

There has been so much media attention on the rise of foreclosures and the hype of getting a good deal.  It's hard not to ignore it and of course everyone wants to get a fantastic deal.  But the fact is that some foreclosures are overpriced and also have undesirable conditions attached to them.  On a foreclosure, what you see is what you get. The bank will not make any repairs.  One important thing to do is to evaluate the cost of repairs to make sure that it will not exceed fair market value of the property.  Otherwise, you could have bought the house down the street for less money.  Often there is not electricity or water available, and it is the buyer responsibility to turn it on to inspect the home.  And again, even if you do find something severely wrong, the bank will not fix it. The sale is AS-IS.  A good value in a foreclosure requires research and due diligence.  You'll need a good home inspector and contractor on hand to work up the repairs and numbers. 

When working with the Charleston Relocation Experts Team, Buyer representation is a FREE service and we'll have you navigate the process to make it a smooth ride! Call or email Michele Reneau when you ready to have an agent looking out for YOU!

Stay tuned for more myths...*The series is adapted from the REBAC article published October 2008, 10 Common Myths Shared by First-Time Homebuyers in Today's Buyer's Rep.

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Michele Reneau, ABR, GRI, CRS

www.CharlestonRelocationExperts.com

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Comment balloon 5 commentsMichele Reneau • November 24 2008 07:40AM

Comments

Good points....I think people who are finally accept foreclosure know that it's stupid for them to invest into a home that they will no longer own.  Investment buyers aren't aware of this fact. 

Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) almost 10 years ago

They really take much too long to close.  My buyer clients are frustrated with it all.  Better for those sellers who are serious about moving!

It's a Good Life!

Fran

Posted by Frances C. Rokicki, Broker-Mentor,CRS (Fran Rokicki Realty, LLC) almost 10 years ago

Michele~Again, I love this series! Your post provides an accurate picture of the biggest challenge I see in buying a foreclosed home...the seller (bank) will not agree to any repairs. I had a buyer who was under contract to buy a bank-owned home earlier this summer that almost fell through because the bank would not make a $200 roof repair to stop the active roof leak...the end result was that the Buyer had to get permission to make the repair himself prior to closing or his lender would not loan the money...Scary, I know...but it was the only way it would close. I have spent many hours explaining to Buyers this pitfall to buying a foreclosed home. Let's hope these banks get smarter before they end up owning a quarter of the properties in the country.

Posted by LaShawn Norden, REALTOR, (321) 377-0157, Your Real Estate Advocate in Central FL (Keller Williams Heritage Realty) almost 10 years ago

You make a great point. There is an inherent risk associated with foreclosures/ distressed properties. Properties are sold as is and if there ARE any problems- it's your job to get them fixed. The price may be significantly low but you have to factor in the repairs and costs to accomplish the task of fixing the property. If it doesn't add up, it's not a good deal.

Another thing to consider is that if you want these properties- you are going to have to deal with a bank- in one way or another, and that could add up to weeks and even months longer than it would a non-distressed/ non- foreclosure property.

It takes a certain type of client to deal with these properties. They should know the time and work that needs to be put into buying foreclosure/ bank owned properties.

Thanks for sharing, Nicole Weidauer

The Egerer & Weiauer Team, Keller Williams Realty North Seattle

Posted by Nicole Weidauer (Keller Williams Greater Seattle) almost 10 years ago

Larry-Oh how true! It's sad to see the condition of the homes.

Frances-Great point! Sellers competing with foreclosures that are motivated and in good condition can take advantage of the situation.

LaShawn-I've been in those shoes before too. It can be quite stressful. Luckily mine was able to make the repair also.

Nicole-I agree that non-foreclosure take much longer and many buyers and agents stay away from them.

Posted by Michele Reneau, Realtor, GRI ~ Charleston, SC Relocation Experts Team (Certified Staging Professional (CSP) Elite Instructor) almost 10 years ago

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