Enrique,
Yes, it is a good idea to buy a foreclosure; however, as with any property purchase - it DEPENDS on the condition of the property and the amount of money or financing that is available to you. Therefore, if the property is in need of excessive repair - it is best that you get pre-approved for a loan first if you don't have the cash available to handle repairs.

IF you can find a foreclosure that is in somewhat good shape with little to no work required, I would say that would be an ideal purchase. However, if much time, effort, and money is required, I would think twice considering that there is a surplus of properties right now to choose from - sellers are anxious to sell and there are some great properties for buyers in move-in condition without needing to go via the foreclosure path - if one does not want to spend the time, money, and effort that most foreclosures require. In any case, I am confident that in this market, you will find a great deal no matter if it is a foreclosure or not. This is a buyer's market with record low real estate prices.

Enrique, if you are looking to buy in your zip code (60632) near Midway, please let me know. I have worked, studied, and/or lived in the Midway area for over 20 years!. So,if you are looking to buy near Midway, anywhere in Illinois, or the Chicagoland area, feel free to call me, if you are currently not working exclusively with an agent, I would be glad to represent you as your buyer's agent.

I hope the response to your question helps.

Thank you,
Carmen Rodriguez
Licensed IL Real Estate Broker
Century 21 SGR
Chicago, IL
crealestateus@yahoo.com
312-656-5914

YES! That's the answer to your general question. When it comes to a specific property then the answer is, it depends on the condition. I am currently helping a first time buyer and all we have looked at is banked owned (also known as REO) and short sales. We have seen a lot of properties that require a tremendous amount of work, but also some that are close to move in ready. Happily we just had the inspection of a property yesterday and it passed with flying colors, so it's on to closing in a few weeks. My first time buyer is truly getting the deal of a lifetime that will give them a great start on the property ladder.

The number one thing you need to do is to get pre-approved for a loan. These days bank owned properties attract muliple offers and go very quickly in my area. If you are not pre-approved you have virtually no chance of making a successful offer.

Also, don't forget that the clock is ticking on the $8,000 Federal Tax Credit for First Time Buyers. You've got to close BEFORE December 1, 2009.

Good luck finding a great deal.

Hi Enrique,

If the houses you are looking at need a lot of work, it sounds like the FHA 203(k) loan would be a great option for you. If you're pre-approved for $150K and the house costs $90K, with normal loans you will not be able to borrow more than the purchase price less down payment. However, the 203(k) loan gives you cash to complete the renovations based on what the house will be worth once everything is completed.

Linda Scott with Wintrust Mortgage (630-588-4079) has been doing these loans for quite some time now - she's very knowledgeable and will help you get on track. These deals can take longer to get to closing because you'll have to get the plans and your contractor approved by the lender, but it can be a great way to affordably get into the market!

Best of luck!
Laurie, The Pych Team @ RE/MAX In The Village
Oak Park, IL

It depends. Some foreclosures are in decent condition, but many need a lot of work and often the utilities are all shut off. If the property is not considered 'habitable' by the bank, you may not be able to get a loan, but your question seems to indicate that you might have a 'rehab' loan approval. Even some of those are difficult to deal with and many banks who own these foreslosures do not want to deal with such a loan. It's hard to generalize, except that for 90K, I think I can generalize to say that this property must be in pretty BAD shape!
If you would like some help, please contact me via my web site. If you prefer to do this alone, you really need an attorney to advise. Good Luck

philip

Hi Enrique,

It might be a good deal to buy a REO. But sometimes these properties are trashed and need some work. As a first timer you may not be able to predict what the costs would be to fix up a property the way you like it. Sometimes you can get a quote for a new floor for $5k and pull up the old floor and find all kinds of dry rot that will end up costing double. If you are working with a good realtor and contractor you can do well. The other challenge is that the home may not qualify for a loan. If the home is trashed then many lenders will not lend on the property so you have to look at that as well. Good luck!