Lashae, Home Seller in Minneapolis, MN

My husband and I purchased a foreclosure property recently for $400K, the original sales price was $700K.

Asked by Lashae, Minneapolis, MN Mon Aug 18, 2008

There is a brand new home on the market currently ~ an exact duplicate of ours for $550M. However, there are also about 5-6 other foreclosure homes ranging in price from $390K-$499K. We plan to live there for about 10 years if not more. I'm starting to wonder if we got a good deal. Our home only needed new appliances and we sold the old ones for $700. I guess I'm concerned because the other foreclosures are not moving like previous ones did. We purchased right before the interest rates shot up too, 5.6% fixed for 30 years. Do you think it was a smart move? We are hoping we made the right decision. The neighborhood could be wonderful and according to the appraiser a $800K area once all the homes get sold.

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I'm doing nearly the exact same thing in Champlin right now. House was built in 2006 and originally $700k but I picked it up for a little under $400k... in fact I close on it tomorrow.

I was co-author for a research paper on foreclosures and short sales in the Twin Cities and their impact on sales in the MLS and I can assure you that this market is far from over. We have not yet hit the peak of foreclosures or the bottom of prices... I'm sure of that. At the same time, mortgage rates are a little higher and money is a lot harder to get. I locked in at 5 7/8 and am thrilled.

Here's how I see it: I didn't buy at the absolute bottom but I bought at a great interest rate, plan to be there 5-10 years, and I bought for about $150,000 - $200,000 less than it would cost to build it today. Will other people get better prices in the future? Probably. Will they get a better all-around deal than I did? Maybe. Am I guaranteed to be a HUGE winner on this house in the long term? Definitely.

Many buyers today have the exact same question as you do... it shows how much the mentality has changed from 2005 when it was "I better offer right now before I lose the house to someone else." Now it is "well, I better not buy now because it MIGHT be a better deal tomorrow."

It's just like any other product for sale... sometimes you get it at the best price, sometimes you just get it at a good price. Regardless, I don't think that you could say you got the house at a BAD price... but the previous buyer sure did!
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1 vote Thank Flag Link Mon Aug 18, 2008
Original asking price and previous sales price unfortunately do not matter for what your house is worth in Today's Market; however, it sounds like you are planning on staying there for a while, so I would not beat yourself up too much as the market will correct itself.
2 votes Thank Flag Link Mon Aug 18, 2008
Yes, all of these agents have given you great info. Real estate should never be considered a short term investment, especially if it's the home you're going to be living in. I think you made an error in your statement, did you mean to type $550 MILLION or THOUSAND? It would appear that your purchase price will stand you in good stead for the amount of time you'll be living there. Buying real estate is a little like the stock market in that there are levels of risk one needs to assess and decide if they're comfortable with the risk. Your interest rate is amazing and your price is sound. If values go down in the next year or so, it won't directly impact you unless you plan to sell and it doesn't sound like you're doing that. So, based on your risk vs. your reward, I think you've done a great job provided you are going to stay where you are for a good while.
1 vote Thank Flag Link Mon Aug 18, 2008
WOW a 5.6% interest rate, it appears from your statements you made a wise decision with only an upside. I would agree with Scott dont beat yourself up over your purchase.
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1 vote Thank Flag Link Mon Aug 18, 2008
If you are planning on living there for a long period of time, this market will have turned, the homes will be sold and values will be back up again before you know it. it sounds like you got a great deal. and if you love the house than that is all that counts. the other houses may need more work or be different in some other way, after all you choose this house over them didnt you. you will be fine.
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0 votes Thank Flag Link Mon Aug 18, 2008
Thanks for the answers and support. Yes, I meant to type $550 thousand. Our home is also a 2006 build and was in terrific shape. Our appraiser thought that it had never been lived in before. While I haven't seen the conditions of these other homes, I suppose I wish we had gotten in at $399K or $375K just to be "safe". However, we do intend to stay long-term. Our neighbor who purchased at $390K (the lowest seen thus far) told us that the condition of the inside of his home was terrible and he had to do a lot of work, so I guess in comparison we are lucky. Thank you again for the answers!!
0 votes Thank Flag Link Mon Aug 18, 2008
I beleive the advice you have been given is correct. Burnsville is still a central hub for the twin cities and offers many opportunities, so with a few years under your belt, you should have built up some decent equity. The key is "staying" there for at least 5 plus years to let it build. Good luck.
0 votes Thank Flag Link Mon Aug 18, 2008
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