Home Buying in McKinney>Question Details

Texas58,  in McKinney, TX

If there are 3 or more homes in foreclosure on the same street should it be "buyer be ware" of that area?

Asked by Texas58, McKinney, TX Sun Dec 4, 2011

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I think you have your answer on the buyer beware but here is something else to consider. If you buy a home in the same are before those foreclosures close your may be paying more than if you had bought after they close. The reason for this is that the appraisor for your loan looks at recent sales only not what if currently for sale. So just be sure that you are working with a Realor who can give you all the information you will need to make an educated offer. Good luck to you.
Web Reference: http://www.lindalorenzo.com
1 vote Thank Flag Link Mon Dec 5, 2011
Your question is a reflection of our times. The number of distressed properties (owners who are in distress, actually) has increased dramatically. Distress is typically caused by a job loss or other reduction in income or by an increase in unexpected expenses. While many times the job loss is an individual situation, sometimes employer lay off a lot of workers at one time, resulting in higher than number distressed situations in a particular area.
Employment in McKinney has suffered some losses but not exceptionally high, and the job gains in nearby areas tend to override those job losses by bringing in buyers from other areas.
There is no concept in my estimation that covers a neighborhood in and of itself having a distressful problem - except some rare circumstances like Love Canal or Three Mile Island that affect an area in wholesale fashion. We don't know of any distressful situations like that anywhere around D/FW.

The stock market might be a good one to consider for comparison: people don't buy stocks when they're down, because they're down. And they don't buy stocks when they're up, because they're too expensive. So, when do you buy stocks? Remember "Buy Low, Sell High" and apply it to real estate as well. If you don't buy a house because the neighbors are in distress, then you surely won't buy when the neighbors are highly successful because the the houses will be too expensive.

A particular house might have issues with deferred maintenance due to the owner not having money to keep the house up. So, have the house inspected to find any repairs that are needed. In that sense 'caveat emptor' but take advantage of the lower prices to get a good deal. Ask your Realtor for advice on pricing.

You might want to see the graphic I posted on my website below for a comparison of the states for negative equity.
Web Reference: http://www.SumnerRealty.com
0 votes Thank Flag Link Mon Jan 16, 2012
As you can see from the many answers, it is a difficult question to answer and perhaps impossible to answer. Perhaps no more than any other sale.
0 votes Thank Flag Link Mon Dec 5, 2011
Bruce Lynn, Real Estate Pro in Coppell, TX
Hey Texas58

Linda gave a great answer. Buying a home all depends on your vision and objectives. If you plan on living in that home for the next 15+ years, those 3 foreclosures probably mean nothing to you. If you are buying as a short term purchase, that is a whole nother story.

You need to work with a licensed agent who is familiar with the market you are interested in and can discuss your objectives, your current situation, and what options you may have. There is very little "general advice" in real estate. All advice is VERY dependant on multiple factors that change with each neighborhood, each buyer, and each seller.

If you would like a personalized discussion, please feel free to call or email me.

Brian Rayl
Keller Williams Elite
0 votes Thank Flag Link Mon Dec 5, 2011
Nope. Call it the state of the economy. We're actually in MUCH better shape in our region that so many parts of the country.
Have a blessed day!
0 votes Thank Flag Link Sun Dec 4, 2011
Simple answer; NO ... UNLESS new construction contractor may have shorted construction process

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Sun Dec 4, 2011
You have seen some good advice below. The most important things to take away from them are:
1. Buyer Beware is something that you should always practice, regardless of the foreclosures.
2. As part of the Buyer Beware, you should have the home inspected by a licensed inspector that you choose (one that works for you, not the seller).
3. Foreclosures could bring values of other homes in the area down slightly, however it shouldn't be an indicator of future declines. (once we get through this tough economy the foreclosures should begin to diminish and home prices will rebound).

One other item of note: if you are not already working with a Realtor who represents YOU as a buyers agent, you are doing yourself a disservice. There should not be a cost to you as a buyer to have a Realtor represent you. The real estate agent that has the home listed is working for the seller (not you) so you will want to hire someone to keep your best interests at heart.

Good luck with your home shopping. If our team of agents can be of service to you, please let us know.

Melissa Hailey
Coldwell Banker Jane Henry Realtors
North Texas Top Team, Realtors
0 votes Thank Flag Link Sun Dec 4, 2011
It isn't necessarily so. If the subdivision has 1500 homes and there are 5 foreclosure in which 3 are on the same street doesn't meant that it is a bad subdivision. Of course, you should always beware when purchasing a home since plenty of foreclosure will bring the price of the homes in the area down. But it all also depends on your goal for purchasing a home. You buyer agent should be able to inform and help you with the buying process and answers any questions you have. If you haven't selected an agent, I'd love to work with you. If you need any references from my past clients, please let me know. I'd be more than happy to provide it to you.

Thank you!
Susie Kay, GRI, CHMS, SFR
Residential/Commercial/Investment/Property Management
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240

Servicing your real estate need is my priority!
0 votes Thank Flag Link Sun Dec 4, 2011
Not at all; it is more coincidence than anything. Remember that in our McKinney marketplace it is more likely the owner's financial situations which contributed to the problem; moreso than the neighborhood. The positive side of the equation for a buyer is that the comps might allow you to buy an undervalued home which, in time, would be a good equity investment.
0 votes Thank Flag Link Sun Dec 4, 2011
All that means is that 3 owners had financial problems. It's probably a great situation for a buyer to consider that neighborhood or even one of the foreclosures because their presence means a better price for you (buying one of the foreclosures or a home nearby). If you're planning to buy and stay and you find something you like I'd say jump on it.
0 votes Thank Flag Link Sun Dec 4, 2011
Any foreclosure should buyer beware, as some foreclosures sit on the market for long periods of time with no maintenance. Another possible reason a foreclosure hasn't sold may be due to a foundation issue.

A thorough home inspection will give you the overall condition of the property you are looking at.

Several foreclosures on a street can drop appraised property values until they are all off the market.

Systematic Home Inspections
0 votes Thank Flag Link Sun Dec 4, 2011
The foreclosures might be driving the price of homes DOWN in that area.
A buyer looking to hold long term shouldn't worry about that.
0 votes Thank Flag Link Sun Dec 4, 2011
Depends on your objectives when buying, but it certainly warrants further research. I would say it is always "Buyer Beware" when purchasing anything, including real property.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Sun Dec 4, 2011
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