Beware of Zombie TitlesWith the economic downturn, anyone dealing in real estate quickly became familiar with previously little-known terms such as foreclosure and short sale. Now that the housing market
All Realtors are in the business of connecting buyers and sellers. That is the only hidden agenda they have, typically. Realtors are paid by the seller to bring a buyer, basically. Occasionally the seller thinks that he will make more money by not offering to pay a Realtor. After the house sits for a while with sporadic activity and strange offers, the seller may contact a Realtor for help.
Realtors with experience in the market understand how to price a house for sale and how to negotiate. There is some truth to the fact that foreclosed homes have been stripped by the previous owners, but not always. It is also true that homeowners who must sell because they need the money are usually not spending what little cash they have on maintenance. This means when the bank forecloses and the seller leaves the deferred maintenance and any damage caused after foreclosure are costs that the new buyer will need to take on. Banks normally do nothing to fix a place up. By law banks are exempt from providing you the buyer a disclosure of the condition of a home, either.
So, do all homes that were foreclosed on need repairs? No, but many do.
Without knowing what was said it would be difficult to pass judgment on the quality of it. You have to inspect every foreclosed home on your own. HUD homes usually have a Property Condition Report that indicates what the HUD inspector found, but this is not gospel, just a good guideline. If the HUD home says that it is not insurable, it means that the condition is below standard for you to get a mortgage and just move in. Some repairs would be required prior to occupancy.
Yes, your assessment that buyers who need to sell and can't find a buyer can wind up in foreclosure. Just remember that they probably didn't keep up the house, either.
As to value versus price, many times a foreclosed home can be more than worth it compared to an existing home sale. The reason is that cosmetically the house may be unappealing and won't fetch top dollar. Or, the repairs may actually cost a much smaller amount than the buyer thinks, and no offers are made because buyers are inexperienced.
If you find the right plan in the right neighborhood at seemingly the right price, ask a knowledgeable contractor who can fix it up to go with you to get an estimate of repair costs, including things not required by HUD. If the fix-up costs plus the house price is lower than the market for the same house fixed up, how can you go wrong?... more