Home Buying in Miami Beach>Question Details

Alison Hillm…, Other/Just Looking in San Francisco, CA

Is buying a foreclosure smart for a first-time home buyer?

Asked by Alison Hillman, San Francisco, CA Fri Jul 13, 2012

Help the community by answering this question:

Answers

12
BEST ANSWER
Home buyers, regardless of the type of sale, would be well advised to take this step with the support of an experienced real estate professional that can guide you through the process.

Beyond having an agent in your corner, you should also take advantage of the opportunity to inspect the property. The more you understand about the property the better equipped you will be to make a decision that protects your personal interests.

Good luck,

Bill
2 votes Thank Flag Link Sat Jul 14, 2012
Good call on the inspection!
Flag Mon Jul 16, 2012
It is a personal decision one must make based on the amount of time they are looking to spend before getting a home. Straighforward re-sales are easiest and can be less heartache if the foreclosure goes awry.
1 vote Thank Flag Link Thu Jul 19, 2012
Not especially.

One of the first choices the first-time home buyer would be smart to make is to decide if they're a real estate investor or a home buyer. I say this because there are a lot of great deals on homes that just aren't right for a buyer to live in, and sometimes the right home isn't a distressed property of some sort.

I know it's difficult for people to decide; it's so much easier to have a foot on each side. I share the view that "we shape our houses, then they shape us," and so I strongly urge people to buy a home that is comfortable for them to live in, and if they can't afford it, to continue to rent.
1 vote Thank Flag Link Fri Jul 13, 2012
Hi Alison,

In reference to your question it all depends on the condition of the property more than if it is a foreclosure or not and if you are or not a first time home buyer.
Some foreclosures require a lot of fixing up others (very rarely) are turn key operation.
It is a question of familiarizing with them and see how much or not you would like to take on after closing on the purchase.

Let me know if I may be of further assistance.

Regards,

Mercedes
Mercedes Henze
Realtor Associate
CLHMS - BPO
305 205 4214 cell
mercedesscott@earthlink.net
http://www.mercedeshenze.listingbook.com
Fax 1 866 213 5785
Beachfront Realty Inc.
517 Arthur Godfrey Rd
Miami Beach-Fl-33140
1 vote Thank Flag Link Fri Jul 13, 2012
Yes, it is a very smart move. You can find a good home at a great price. It will likely require some cosmetic repairs, but that is done anyways when a home is purchased.

Having a good agent is equally important, find one that has sold forclosures before and ask for "the truth" about the process....including what could go wrong (which may include HOA related delays to closing).

Foreclosures are so much easier to aquire than short-sales....that i will recommend you stay away from. There are many in the market and they usuallu look pretty...but they take so long to close you may develop a few gray hairs while waiting. Was this answer helpful? If so please click on the "green thumbs up" or the "best answer".

Good Luck

Tony Vega
Charles Rutenberg Realty
1 vote Thank Flag Link Fri Jul 13, 2012
Good morning Alison,

I've been helping First Time Buyers for 23 years as a mortgage professional and I will tell you what I have always told my clients here in New York: If you are a First Time Buyer, steer clear of foreclosures and short sales.

Foreclosures are someone else's headache. The home probably has not been well-maintained and you're a First Time Buyer adjusting to paying a mortgage. Do you really want to walk in the door to someone else's deferred maintenance that YOU will have to pay for? Also, if you're thinking there are deals to be had in terms of lower prices, mostly those "deals" go to professional investors who can pay cash, negotiate hard with a Lender, and close fast.

For Short Sales, my attitude of late is that First Time Buyers should steer clear. Short Sales tend to be a better deal for the homeowner than for the Buyer. You'll wait MONTHS for the homeowner's Lender to approve the short sale; maybe as long as Six or Seven Months. Meanwhile, you're stuck in a contract to buy that home. I closed a short sale recently with a Buyer who, after seven months said this at the closing table, "I don't even want this house anymore."

And he didn't even get the "deal" on price he thought he was getting! The house appraised for only slightly more than he paid for it at the short sale price. He walked into this deal thinking he was buying a home for $100,000 less than it's value. In the end that wasn't the case.

There are plenty of motivated Sellers with their homes listed on your local MLS. Go find a good Local Mortgage Banker, get prequalified, then find a great, experienced Realtor, and buy the home you want at the price you're willing to pay. It's a Buyer's Market, after all!

Trevor Curran
NMLS #40140
0 votes Thank Flag Link Thu Sep 20, 2012
Absolutely, as long as that purchase receives the same careful consideration any purchase should including an (extra) thorough home inspection, title search and lien search. These homes are sold "as-is" so if your inspection yield something that is too big for you to handle you can cancel.
0 votes Thank Flag Link Thu Sep 20, 2012
Hello Alison,

Only if you have a super devoted realtor who is ready not to sleep at night - knowledgable, experienced in foreclosures. Still, better yet, have an attorney on your team.

It is best to find a great deal - regardless of the transaction's type (normal, short sale or foreclosure).
Most normal sales end up lower in price than foreclosures...multiple offers, bidding wars etc.

Hope this helps,

IrinaKaran
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Tue Aug 7, 2012
It is a personal decision one must make based on the amount of time they are looking to spend before getting a home. Straighforward re-sales are easiest and can be less heartache if the foreclosure goes awry.
0 votes Thank Flag Link Thu Jul 19, 2012
Yes, foreclosures are good, but Re-Sales (straight sales) are best.

You can get more creative with Re-Sales and are likely to get into the proprty with less overall out of pocket if the purchase in structured right.

See 100% loan programs at http://www.pro-option.com
0 votes Thank Flag Link Sat Jul 14, 2012
So much confusion here!!! YES! NO! MAYBE! IT DEPENDS!

I fall in the camp of "It depends."

In most foreclosures, expect some deferred maintenance costs - which likely come out of pocket once escrow closes. You know, flooring, paint, misc. repairs....if you like doing that stuff and want to put in the sweat equity, then it can be right for you.

"Move in ready" places allow for all those repairs to be done and paid in your financing (higher purchase price). So maybe you pay $200 more a month in your house payment, but you don't have to dole out $15,000 cash or whatever amount to get the place to a condition in which you can live in it.

For the everyday homebuyer, I believe that there really is no such thing as a "deal." I believe in the end, it all equals out for the price you pay for "move in ready" vs the price you pay for a foreclosure once you factor in the costs and time to bring the foreclosure up to the same standard as the "move in ready" home.

A significant issue with foreclosures is that bank is exempt from the obligation to disclose defects in the property. After all, they wouldn't know anyways since they never lived there...so without the benefit of that information, you need a bit of luck on your side along with some really good expertise.

So yes, for me, it depends - it can be smart OR it can be a complete nightmare, especially if you cannot afford the repairs - some of which WILL BE unforeseen and possibly significant. The real question is, is it worth the risk to find out? Look at both equity and foreclosure sale properties and draw your own conclusions.

Good Luck!

BeachBrokerBill
CA DRE 01775528
0 votes Thank Flag Link Sat Jul 14, 2012
Hi Alison,

Buying a foreclosure in South Florida today isn't a bad idea if you have the patience! It doesn't really matter if it's your 1st or 50th home purchase. I am a certified FPA (Foreclsure Professional Agent) in South Florida. Please feel free to call me any time and we will address your concerns.
786-277-6314

Ana Carolina Moura
0 votes Thank Flag Link Fri Jul 13, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer