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By Tara-Nicholle Nelson | Broker in San Francisco, CA

Top 10 Myths About Buying a Foreclosure

Top 10 Myths About Buying a Foreclosure

Trulia.com and RealtyTrac recently surveyed US adults to get some insight into what people *think* is involved with buying a foreclosure. Here are the Top 10 Myths that came up, and the facts to set the record straight:

1.       Foreclosures need a huge amount of work.  92 percent of consumers expressed that if they bought a foreclosure, they would be willing to make home improvements after they closed the deal, with 65 percent being willing to invest 20 percent or less of the purchase price.  Although stories of foreclosures missing plumbing and every electrical fixture are very memorable, many foreclosed homes need only the (relatively inexpensive) cosmetics that many new homeowners want to customize no matter what kind of home they’re buying: paint, carpet, etc.

 

2.       Foreclosures sell at massive discounts, compared to other homes.  Almost every member – 95 percent – of the surveyed group expected to pay less for a foreclosed home than for a similar, non-foreclosed home; 18 percent had realistic expectations of less than a 25 percent discount.  However, 36 percent expected to receive a bargain basement discount of 50 percent or more off the value of a similar non-foreclosure.  Reality check: while foreclosures might be discounted massively from what the former owner paid or owed, their discounts are much more modest when compared to their value on today’s market and the prices of similar homes.

 

3.       Buying a foreclosure is risky.  49% of respondents said they perceived buying a foreclosure as risky.  And yes - buying a foreclosure at the auction on the county courthouse steps can have risks, including the risk the new owner will take on the former’s owner’s liens and other loans.  But most buyers looking for foreclosures are looking at bank-owned properties, which are listed on the open market with other, ‘regular’ homes.  Buying these homes is really no more risky than buying a non-foreclosed home.

 

4.       You can’t get inspections on the property when you buy a foreclosed home.  County auction foreclosures don’t often offer the ability for buyers to have the homes inspected.  But virtually all bank-owned properties for sale on the open market not only allow, but encourage buyers to obtain every inspection they deem necessary. This is because almost every bank sells their foreclosed homes as-is, and they want to avoid later liability.  It’s in everyone’s best interests to make sure that the buyer has full information about the property’s condition before they close the deal.

 


5.       There are hidden costs to watch out for when buying a foreclosed home.  Sixty-eight percent of survey respondents who felt there is a negative stigma to buying a foreclosure expressed  the concern that buying a foreclosure poses the danger of hidden costs. At some foreclosure auctions, there are buyer’s premiums and other hefty fees that can really add up and take a chunk out of the effective savings the buyer stood to realize. However, when you buy a bank-owned property that is listed for sale with a real estate agent, the closing costs are the same as they would be if you bought a non-foreclosed home. Overdue property taxes, HOA dues and other bills left behind by the defaulting homeowner are cleared by the bank that owns a foreclosed home before it is sold on the market, though these items should be watched out for if you buy a home at the county foreclosure auction.

 

6.       Foreclosures are more likely to lose their value than “regular” homes. Thirty-five percent of U.S. adults who believed there are downsides to buying foreclosed properties believed this myth. In fact, because foreclosures often offer a discount from the home’s current market value, they may offer some degree of insulation from further depreciation.  Whether a home loses its value or not has to do with the dynamics of the local market, including the area’s supply of homes, demand for homes, interest rates and the health of the employment market – not with whether the home was or was not a foreclosure at the time it was purchased.

 

7.       Most foreclosures happen when homeowners just walk away.  Out of homeowners with a mortgage, only 1 percent said walking away from their home would be their first choice if they were unable to pay their mortgage.  And a whopping 59 percent of mortgage-holders said they wouldn’t walk away from their home – no matter how upside down they were on their mortgage. Most foreclosures happen when the owners lose their jobs or their mortgage adjusts to the point where they absolutely cannot pay the mortgage, no matter how hard they try.  Voluntary ‘walk-away’s are simply not as popular as many people think.

 

8.       When you buy a foreclosure, you should lowball the bank – they are desperate to get these homes off their books.  Stories about in the press abound about the large numbers of foreclosed homes the banks have on their books.  We’ve all heard the adage that banks have no interest in owning these properties.  But the real deal is that they’re simply not desperate enough to give these places away.  Also, the banks mostly service the defaulted loans – they don’t own them.  Various groups of investors do, and they hold the banks accountable to selling the bank-owned property at as high a price as possible, helping them cut their losses.  Many banks won’t even consider lowball offers, and many bank-owned properties actually sell for above the asking price.  Before a bank will take a lowball offer, they will almost always reduce the list price first, and see if that attracts a higher offer than the lowball one they have in hand.

 

9.       You need to be able to pay in cash in order to buy a foreclosure.  Again, if you buy a foreclosed home on the county courthouse steps, you might need to bring a cashier’s check and be ready to pay for the place on the spot.  By contrast, bank-owned homes are bought through a more normal real estate transaction, which means buyers can obtain a mortgage to finance the home just like they would if the home weren’t a foreclosure. It is true, though, that in some markets, banks prefer offers from cash buyers, but this tends to be in situations where the property’s condition is pretty dire, and the bank knows this may make it hard for a buyer to obtain financing.

 

10.   It’s easier to buy a foreclosure with bad credit if you get a mortgage with the same bank that owns the property.  Think about it: why would the bank want to end up with the same property as a foreclosure, again? Well, that’s what would happen if they allowed buyers with low credit scores to buy their foreclosures just to earn the interest on the mortgage. In reality, many banks do offer incentives like lower fees or closing cost credits for buyers who use their bank for their mortgage. But the buyers must meet the same credit, income and other qualification standards as anyone else would to seal the deal. 

Comments

By Pierre Calzadilla,  Fri May 28 2010, 09:35
Fantastic tips Tara and very true. My first home was a foreclosure - and it was one of the best purchases I ever made. I did not look at it as an investment I saw it as a necessity (i was getting married). Little did I know how well that would pay-off later.
By Rick Barth,  Thu Jun 3 2010, 04:43
Good info, Tara. I am a real estate broker who has specialized in foreclosures over the past 12 years (following years in the lending arena), and you are right on.
By Ken Rosenberg,  Thu Jun 3 2010, 04:48
where is the best place on cape cod to buy a summer home foreclosure
ken
By Mary Finn,  Thu Jun 3 2010, 04:54
Here is what actually happened to me trying to buy one:

http://www.associatedcontent.com/article/2010052/foreclosure_follies.html?cat=3

Beware, beware, beware.
By Linda Jandura,  Thu Jun 3 2010, 05:29
Great article. It addresses just about all the issues that most of my clients have asked about buying a foreclosure.
By Scott Godzyk,  Thu Jun 3 2010, 05:57
This is a great blog, you hit many points that people do not realize. I wrote a blog a couple of years back and update it constantly"

From the Leading REO agent interviewed in Money Magazine please check it out for some of my tips

SO YOU WANT TO BUY A FORECLOSURE

http://www.trulia.com/blog/scott_godzyk/2008/08/so_you_want_to_buy_a_forc
By Robert Page,  Thu Jun 3 2010, 06:05
Most excellent!
By Jim Bent,  Thu Jun 3 2010, 06:09
Timely article since we will probably be dealing with a load of foreclosures for the forseeable future, great opportunity for anyone looking to invest in realestate - great time to buy!
By Doug Francis,  Thu Jun 3 2010, 06:18
Foreclosed homes can be in almost any condition so setting realistic expectations for clients are essential. And there has to be a little trust when the bank "verbally accepts" your offer while they send off their 10+ page foreclosure addendum.

All good points, but you and I know that most people will low-ball anyway and then wonder why the bank never responded.

A better survey may be of people who actually bought a foreclosure in the past 18 months.
By Jasmine,  Thu Jun 3 2010, 06:46
I'm in the process of purchasing my first property and it is a foreclosure. It is in surprisingly good condition with mostly cosmetic work needed. I applied for a 203k loan with the bank where I am borrowing the funds to fix necessary repairs like some broken radiators and remodel the antiquated kitchen. The appraisal of my property came in at $99,400 more than my purchase price, including the estimated repair loan amount. I am already seeing the benefit of purchasing a foreclosure. I can't wait to hear what is worth after the repairs.
By Lora Wilson,  Thu Jun 3 2010, 06:49
This is great. I am putting a link on my Vermont Foreclsure blog- http://www.lorasvermontforeclosures.blogspot.com. I especially like the information about houses selling over asking. I can't tell you how many times that has been the case (moreso back in 2005-06 when everyone was buying.)

As far as the low-ball offer, another common myth is that the seller "has to sell for the amount owed." So often will I get offers for the amount of the mortgage note- when it is far less than the market value of course. I always say that REO sellers are professional home sellers. They are better at maximizing their price than most private sellers. Great article, thanks.
By Helen Oliveri,  Thu Jun 3 2010, 06:57
Way to set the records straight Tara!

Foreclosures get a bad rap, but I think this helps show the true facts.
By Laura Sargent,  Thu Jun 3 2010, 07:01
Fantastic - Thanks for posting...so full of great info!
By Glenn Isaacson,  Thu Jun 3 2010, 07:41
Great article! As a Buyer's Agent, I spend half of my time trying to convince my buyers that offering $200,000 on move-in condition REO just listed at $250,000 is a complete waste of time, when market value of the home is $300,000 and in all likelihood, the home will close at somewhere in the $250K-$300K range. They never believe me, until they see for themselves, and the inevitable, "You were absolutely right!" I get from them is always too little, too late. :sigh:
By .,  Thu Jun 3 2010, 08:04
Thanks for choosing this topic for your article. There aremany misconceptions around foreclosures and short sales too. From a seller's perspective, some believe that opting for foreclosure can be more advantageous than short-selling. I would love to hear other comments on this.
By Shelly Cross,  Thu Jun 3 2010, 08:52
Thanks for summing this all up. It is hard at times as a Real Estate Broker to relay this information in a believable format to my clients. People sometimes think we just say things to earn a bigger commission. That, too, is a myth! The reality is, foreclosures are not always the best deal out there. I will be forwarding your information on to all of my clients!
By Dawn Mitchell,  Thu Jun 3 2010, 09:40
Useful information for everyone!
By Joe Robaina, P.A.,  Thu Jun 3 2010, 09:53
Exactly right Tara, that's why I chose to specialize in short sales.
Not only are they a far better way for an embattled seller to get out from under their mortgage without having to file bankruptcy, but in my opinion they are a far better bet for buyers also.
I have noticed that foreclosures have often sold for more than comparable short sales in better condition in the same community. It is also important to note that in a short sale, the buyer gets clear title, without excluding prior liens, etc.
By Linda,  Thu Jun 3 2010, 10:28
There are some homes that have been on the market for over a year in the area I'm interested in. I think the banks need a reality check as to accepting "low-ball" offers. And according to the recent report on 60 Minutes, 100,000,000 home owners have walked away from their mortgages because of the loss in value of their homes.
By Tara-Nicholle Nelson,  Thu Jun 3 2010, 11:14
Hey, folks - thanks for the feedback. Looks like that struck a nerve - good to know that the scene is the same all over the country. If you have other FAQs or frequent foibles you see on the part of your buyers and sellers, let me know! Email tnelson@trulia.com - I'm always looking for topics to cover in this blog and my Inman columns.
By Voices Member,  Thu Jun 3 2010, 11:57
Larry Mc Bride

This can be somewhat true. I have been specializing in REO Properties for 18 years. If you are working with an REO Broker who has experience, you can avoid many of the pitfalls, especially one that has experience in construction. Of course, the best defense is an offense - get a home inspection before you make an offer. I personally have purchased a foreclosure as mypersonal residence. Bought for 65K, spent 9K in rehab and residual value was 200K. I also invested in a 35K, spent 10k and sold in 30 days for $125. Guess I would call these HOME RUNS!
By Liz Ellis,  Thu Jun 3 2010, 12:41
Excellent Article! I think I have addressed all of these myths with clients at one time or another. Thanks!
By Debra Hensley,  Thu Jun 3 2010, 18:03
WOW, I can't say thank you enough! This all sounds so correct and true!! Now, I hope that I can convince my clients that what they have heard isn't always right!!! Thanks much!!
By Kate Nolan,  Fri Jun 4 2010, 14:29
Absolutely spot on. Especially buyers wanting to low ball the bank. Thanks for a good job!!
By Onecheck,  Sat Jun 5 2010, 07:10
Quote from the article "Many banks won’t even consider low ball offers, and many bank-owned properties actually sell for above the asking price". What moron would buy a bank owned foreclosed property above or at asking price. I don't care if its bank owned its still a foreclosure.
By Seth Phillips,  Sat Jun 5 2010, 13:33
Regarding low ball offers. What should you offer a bank or any other seller? First rule what the seller is asking for there property has very little to do with the amount a buyer should offer. Just as what the seller paid for the same property when they bought it has very little to do with it. The most important information is what is the property value in TODAYS market.

Many banks are listing there properties substantially below today's market. Now they receive multiple offers and yes they are selling significantly above the asking price.

Is the buyer of that property a "moron" because they paid above the asking price if that purchase price is still below the current market value?

Market value is the number to concentrate on. Think about it. If you bought a property $50,000 under the asking price and then went around bragging about it. Only to find out that price was $20,000 over the current market price, who would be the "moron".

At courthouse steps auctions the price can be discounted further by the additional risks involved. However risk can be properly managed with knowledge. And of course a little luck never hurts.

If you are interested in buying properties in Los Angeles at foreclosure trustee auctions at good discounts from market value. Check out this resource http://www.SmarteRealEstate.com
By Dan Chase,  Sat Jun 5 2010, 21:34
How about the theory that due to legal problems during foreclosures (not adequate legal paperwork, MRS unable to represent a property they do not own and so on) that foreclosures could be taken back by those who lost them?

There are lawsuits that point that direction. MRS is a servicer, not the owner of a mortgage. Since many mortgages have multiple lenders legally no one person owns it so perhaps no one can foreclose on it legally.

Future lawsuits about this could take a lot of people who bought a foreclosure and place them in a very bad spot.
By Theresa L.,  Sat Jun 5 2010, 22:55
I BOTH "AGREE" AND "DISAGREE" WITH MOST OF THE "VIEWS" STATED IN THIS ARTICLE!! FIRST OF ALL, A "FORECLOSURE" IS, AS YOU SAID, RARELY BROUGHT ABOUT BY THE OWNER JUST "WALKING AWAY" FROM THEIR HOME!! THE REASON IS "TYPICALLY" BECAUSE THE OWNER HAS LOST A JOB, OR OTHER "SIGNIFICANT" INCOME ~~ AND ALSO DUE TO "INCREASED INTEREST RATES IN ARM's"!! AND UNFORTUNATELY IN TODAY'S "SOCIETY" THIS IS BECOMING THE "NORM" NOT THE "EXCEPTION"!!

SO ARE "LOW BALL" OFFERS, FOR MOST "EVERYONE" INTERESTED IN FORECLOSURES TODAY ~~ EXCEPT THOSE WITH ACCESS TO UNLIMITED CAPITAL {I.E., INVESTORS} OR THOSE THAT "SEARCH ONLY FOR FORECLOSURES" AND USUALLY FIND "DEALS" WITHIN THEIR "PRICE RANGE" TO BEGIN WITH!! OTHERWISE ~~ MOST "EVERYONE" BUYING PROPERTY IN THIS "ECONOMY" IS GOING TO "LOW BALL" THE SELLER ~~ WHETHER IT BE THE "BANK" OR NOT!!

SEARCHING "SPECIFICALLY" IN THE "EMERALD ISLE, NC" AREA ~~ I CAN "DEFINITELY" SAY "THE CRYSTAL COAST" DESCRIBES IT BEAUTIFULLY!! AND I'M "PRAYING" THAT THE "GULF DISASTER" ~~ DOESN'T "CHANGE" THAT!! SUBSEQUENTLY, I HAVE SEEN SOME "BEAUTIFUL" FORECLOSURES ~~ PROPERTIES THAT "DEFINITELY WARRANT" THE ASKING PRICE!! I HAVE ALSO SEEN SOME THAT WERE IN "NEED OF REFURBISHING"!! AGAIN, THEY WERE "PRICED ACCORDINGLY"!! THE BOTTOM LINE IS ~~ NO MATTER IF IT'S A "MANSION" REDUCED TO AN "OBTAINABLE PRICE" OR A "FIXER UPPER" PRICED AT "FAIR MARKET VALUE" ~~ MOST "ALL BUYERS" IN THIS "ECONOMY" TAKE THE "LOW BALL" ROUTE ~~ EVEN IF THEY NEVER "FIND" THEIR WAY TO THE PROPERTY!! IT'S JUST A "SIGN" OF THE "TIMES"!! HAVING "MUCH" EXPERIENCE IN THIS AREA . . . I ALSO KNOW "YOU LEARN AS YOU GO ALONG"!!

AND AS A "BUYER" WHO WAS "TWO DAYS AWAY" FROM PUTTING A "LEGITIMATE OFFER" IN ON A "CAREFULLY RESEARCHED AND MUCH DESIRED PROPERTY" IN THE ABOVE AREA ~~ I FEAR THAT IF THE "ANTICIPATED" RESULT OF THE "GULF DISASTER" COMES TO "FRUITION" ~~ "LOW BALL OFFERS" WILL BE A "RELIEF" TO HOMEOWNERS ON THE "GULF AND EAST COAST" BEACH AREAS FOR A "LONG TIME TO COME"!! SO "DEVASTATINGLY SAD" BUT "SEEMINGLY INEVITABLE" ~~ FOR "ALL OF US" THAT "CALL IT HOME" IN "ONE WAY OR ANOTHER"!!
By DeeDee Riley,  Sun Jun 6 2010, 20:14
Great job Tara! And Onecheck - a lot depends on the inventory available and the market value of comparative sales. At the lower end of our market there are investors and many first time buyers competing for bank owned homes and it will often end up with multiple offers where, yes buyers will pay at list price or over to get them. Real estate is local and it may not be happening in some parts of the country but it is definitely happening.
By Aaron Mtuanwi,  Wed Jun 9 2010, 06:05
Thanks for the much time spent to dispel this myths.
By Bisendra Melaram,  Wed Jun 9 2010, 06:08
Awesome job Tara! You hit it right on target with this post! Thanks for putting in the effort.
By Diana Manzato,  Wed Jun 9 2010, 07:02
Great post!
By Andrea Packo,  Wed Jun 9 2010, 07:26
Good points but here in LAS VEGAS, the foreclosure market is HOT! Most properties are now selling at 5-10% ABOVE the listed asking price which is usually near the comps in the area. WHY? Because we have about 25,000 investors and home buyers competing for the same 5,000 REO's. It's turning into a bidding war. So, low-ballers do not stand a chance in Las Vegas right now. Every house has 7-8 and up to 60 offers! I show foreclosures constantly and they range from totally stripped out (no kitchen, no doors, no central air) all the way to perfect including all the appliances in place and working. Still I write every offer with inspection required to protect the buyer. So, if you want a great deal, do buy a foreclosure in Las Vegas because we are at about 1/2 of what the prices were 5 years ago. And buy soon because these price wars are driving the market back up.
By Eric Egeland,  Wed Jun 9 2010, 10:50
Nice post!!!
By Mark Laycock,  Wed Jun 9 2010, 15:47
Good information. It is always interesting to know what is in the consumer's mind. Here is my top 10 Foreclosure TRUTHS:
1. The more work it requires, the more it finally costs to have it fixed. This is the “discount”.
2. The Discounts are based on the risk the buyer must take to buy it.
3. The risk is that there is no disclosure from the seller. Usually the greater the risk, the bigger the discount.
4. No inspection is a greater risk. They are usually sold as is so the inspection will not get you any allowances from the seller.
5. Hidden costs – this is every dollar paid above what the bank would have sold it for. They are strictly looking at the numbers. There is no heart in this transaction.
6. Losing value can be reversed by an upswing in the market or by improvements being made on the property.
7. Walk away, give back the keys, or face eviction. Any one of these is all-humiliating.
8. The homes are priced to get offers.
9. Cash gives three advantages – First, no chance of financing falling through. Second, no time waiting for the financing process. Third, no seller paid closing costs needed by the buyer for the financing pre-paids, origination fees, and bankers profits.
10. Bad credit – just forget it.
By Valerie Moldow,  Wed Jun 9 2010, 18:17
It really helps to clarify some of the beliefs and myths in buying foreclosures. Most buyers just want a "good deal" and it is not always found in the distressed inventory. Thanks for the information.

V.Moldow
By Nancy,  Thu Jun 10 2010, 08:06
What have seen in Forecosures here in the Pacific NW is houses stripped of everything, as they must of been forced out and given no other choice, so they get mad and distroy the properties,

The Other problem we have yet to face is that people with good credit and money can only buy these, and almost every foreclosure I investagate, the rehab of the home there are no permits, first time buyers trying to fix things and covering up things to try and swing a profit. This will catch up with them, however all of this is so new, it will take a few years

The county revenue for permits so forth and so on could benifite greatly by tracking the sales and making sure all work is up to the code, it is a great reveune sorce for the counties and it is the right way to do things. The next buyer isn't getting stung.

I purchased a new home, and it is a lemon, sitting on top of an aqua fir, the county here let the builders slid on things if they had not had an problems with said same builder, so this home has had no daily working septic for years and no is in complete failure (a fast system) it is too low way below water table, the garage slab is below grade, and this is a rare thing to have happen, however paying near 375k for the home, I may walk away because the RnR is 200k to fix, and that is without really solving the main issue of the house is too low, a stub wall must be built to raise the entire home, that means garage door, porches, etc are all too low, Lets get real, whom ever buy this gets hidden problems, the same thing that is happening on other foreclosures. Now my creidit was great, but I can't buy anything now because of a bad builder and a county that will not do anything about the way it inspected homes in the height of it all, they do different now. AS I spend my life saving, being disabilied, I will never be able to purchase again, at 60 with medial problem very close to living on the street.

one sick puppy in more than one way.

BUYERS BE A WARE OF ALL HOUSES.
lost, cold, loney, no relief in site. got taken big time.
By Loriann M. Harrison,  Thu Jun 10 2010, 08:14
Great blog, and I agree with the agent that mentioned the effect of regional markets on some of the topics mentioned. Overall, very nice work.
By Mary Ann Williams,  Thu Jun 10 2010, 09:14
With regard to winding up with the previous owners liabilities, that is not accurate. One should always have a title search done by a reputable title company and then buy the title insurance offered by that company including the market value rider. This is the only time that I recommend a market value rider.
By Moshon Reuveni,  Fri Jun 11 2010, 09:31
When it comes to buying of foreclosed reos showing "all cash" in an offer gives you a big advantage over all other offers. you really do not have to have the all cash but you should be bale to demonstrate that you have it or that that you have access to it. this can be done can with the help of hard money private investors. Get the complete list of hard money lenders in any state updated with new investors database daily at http://www.lendinguniverse.com and many additional tips on how to obtain financing for reos and short sale properties.
By Tonia Rahming,  Sat Jun 12 2010, 05:17
Great information! I posted it on my blog as well as sent an email to buyers I am currently working with. You nailed it.
By Bill Mcdermott,  Thu Jun 17 2010, 12:09
Great Infomation!
By Stephanie Leon PA 786-574-3928,  Fri Jun 18 2010, 21:02
Soooo very true. Excellent post...
By Joanna Morris,  Sun Jun 20 2010, 13:13
Thank you for the post. This is terrific information.
By Rhonda Holt,  Fri Jul 2 2010, 13:50
Great tips, but I don't agree about the risk. I think it's more of a risk for those that are unfamiliar with the foreclosure process. The property could have liens, unclear title, the home itself may be destroyed inside if the person buying has never been in the home. This type of transaction may overwhelm a first time home buyer and can definitely by risky if they don't fully understand how to protect themselves throughout the transaction.

Rhonda Holt
Weichert Realtors, H.P Greenfield

http://www.RhondaHolt.com
By Todd Buskard,  Thu Nov 11 2010, 05:46
Some nice points in a very nice format. Thank you for posting.
I have to point out that they is some drawbacks however to buying a foreclosure that you didn't mention that I believe buyers should be aware of ahead of time.
If when having inspections there are major issues found, the bank is often less likely to re-negotiate or fix them than a regular home seller is. This means that the buyer who has just paid several hundred dollars or more on inspections may not be able to close on the transaction if the item is something an appraiser is going to draw attention to. Or if that item is costly enough that the purchase is no longer as attractive to the buyer anymore in light of the additional repair costs needed.
The banks often still dictate which title company is used as well. Many are now stating that they will pay for the owners police (seller paid cost in Michigan) if the buyer closes with the selling bank's choice of title companies. What they don't tell you is that the closing fee is many times double for the buyer than they would be if the transaction closed with a local title company. These companies often do not check local municipalities to see if things like a water and sewer bill is owing (which in Michigan can become a lien on the property).
The banks also do not guarantee that they will be ready to close on time, even though there are often stiff penalties to a buyer who is not ready to seal the deal by the contracted close by date. $50-100 a day fee to the buyer is common for delaying closing. Meanwhile, if the seller is not ready to close on time, there is no added concession to the buyer even if they have lost a rate lock, therefore costing the buyer additional money.
All in all, I think foreclosures can be a good purchase if the buyer is well informed. And if the price outweighs these added costs and risks. Some buyers may not be comfortable with these risks and some first time home buyers simply may not have the extra cash to make the deal work. Those buyers may be more comfortable pursuing a home that is not a foreclosure.
By Voices Member,  Thu Nov 11 2010, 09:22
Good article and truthful. The misconceptions on buying a foreclosure are huge. i get them every day. The Banks will not sell at huge discounts over current market price, if you want to low ball an offer you are wasting your time. It is not emotional to the Bank. They have an apprasal and a couple of BPO's so they know what they will sell it for. The investors behind the scenes will make the final decision.
By Dorothy Carter,  Fri Nov 12 2010, 13:29
Good to know what our public is thinking. Sometimes we take for granted that our clients know as much as we do. Thanks for the input. Dottie Carter, Realtor with the Long and Foster Gainesville team.
By Francesca Patrizio,  Sun Nov 14 2010, 05:31
Tara, u should be an aide to Obama to help us out of this crisis! I'll stop what I am doing anytime to read your posts. Thanks!
By Davidm,  Tue Nov 30 2010, 23:51
Very interesting. I learned a lot from this.

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