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Kathy Godin's Blog

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Myth: There Are No Pitfalls to Buying a Foreclosure

Why pay retail?  Get a foreclosure.  It’s like buying wholesale.  They’re houses just like the rest of the neighborhood.  “Bunch of crap” says Grumpy Bella.

Is Grumpy Bella out of line?  The experts encourage buyers to look into foreclosures.  Is she saying don’t buy a foreclosure?  Are the experts front men for the banks that need to unload all their foreclosed homes?  Here’s what’s happening to me now.

A couple found a foreclosed home they wanted to buy.  They couldn’t qualify for a mortgage.  We talked.  I invest in real estate.  Nothing big, but I always have some houses.  Since I knew her well, I was willing to buy the home and sell it to them under a lease-option.  Here’s what happened:

1.  The house was a bloody mess.  It had been vacant a long time.  There was damage.  Between people and the elements not one room was livable.

2.  Thieves stripped all the copper piping and there was no salvaging the heating and air system.

3.  Their lease was running out.  Could we close on time?  Yes.  Seller offered to provide a quit-claim deed as soon as they received the money.

4.  I insisted on a warranty deed and title insurance.  Oops.  There’s a problem with the title (not unusual with foreclosures).  The process slowed to a crawl.  On a bad day, progress stopped.  We’re still working on it.  Their lease will run out and require alternate plans.

Why didn’t we walk away?  The couple still wants the house.  Looks great from the outside and they can fix most things inside themselves. Plus he works for a heating and air company who will give him a nice discount.  They love the location and price is right.

What Grumpy Bella meant when she said “bunch of crap” is that there are pitfalls.  The key: Do you want a ready-to-move-in home or do you want to put some extra effort in exchange for a lower price?  Does your family agree?

Kathy Godin, Award-Winning Loan Officer and Branch Manager
CrossCountry Mortgage Inc.
(919) 789-9888
Where people, not computer robots, answer the phone.
Proudly Serving All of North Carolina

 
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