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Charity Barn…, Real Estate Pro in Flowood, MS

If I buy a foreclosure is it really a good buy?

Asked by Charity Barnes, Flowood, MS Thu Aug 9, 2007

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Pam:
Read the last paragraph of my previous post that starts with NO. Sometimes people in foreclosure are too embarrassed to list their home with an agent. I was looking at foreclosures and found a better value through the MLS that wasn't in foreclosure because I was investigating comparable values. But because I KNEW how to research foreclosures, I researched the seller of the home listed in the MLS. It turns out that the house listed in the MLS wasn't in foreclosure but the owners had two other properties that were in foreclosure and a brand new construction million dollar home that they were living in that wasn't in foreclosure but would be soon if the other properties didn't sell soon.

As I said, and so did Lara, you have to look at each property and not make any blanket assumptions. I started my previous answer with NO to specifically answer a blanket question of "Is it really a good buy?"
Ruth
3 votes Thank Flag Link Thu Aug 9, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
I don't think there is a portion of the market where you can say, "This type of property is a good buy," or "This type of property is a bad buy." Asking if foreclosures in general are good buys is like asking if luxury homes are good buys, or are townhouses good buys. How about, "Are houses listed in the MLS good buys?" There are good buys and bad buys in every segment of the market. Just as there are differences amongst average sellers, there are differences amongst financial institutions. Some will price accordingly, some won't. Some foreclosed properties may come from good people with bad luck (thus a relatively well maintained home), while others from neglectful or malicious owners. You cannot insulate yourself from risk through generalizations. Better to have a professional to guide you to the specific properties which are good values.
2 votes Thank Flag Link Thu Aug 9, 2007
Ruth....I appreciate your comment. buying real estate is a case by case purchase. Since we are addressing the blanket on forclosures is that my experience with the foreclosures in my area are not great buys. I have found by watching the market, knowing your inventory and watching can produce a better buy and of course it is a case by case situation.
1 vote Thank Flag Link Thu Aug 9, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
As an agent who deals alot in forclosures I must say that I have had good experiences and bad experiences. I have shown homes that were in amazingly good condition and homes that were so bad we didn't make it past the front door. The answer to this question is simple. Investage, investage, investage. In Michigan the forclosure rate is one of the highest in the nation. Some of the banks are very difficult to deal with while HUD homes are pretty simple and straight forward. HUD is very specific as to what is needed and the process of the sale. You can go to their website and download all the information and needed documents. Go to HUD.GOV
1 vote Thank Flag Link Thu Aug 9, 2007
NO. You could be buying a can of worms even if the home is perfect. The biggest risk is an angry former owner. There is also the risk that if the owner didn't pay his mortgage, maybe he didn't pay his IRS or State taxes either. The government could seize the home after you bought it and put money into fixing it up.

What you need to look at, is the home a really good buy? Are you protected from the risks?

Some homes are in foreclosure because the home lost value. So if the home bought for $100,000 and the mortgage was for $80,000 and you buy it for $80,0000, you better make sure the home is still worth $100,000. It might only be worth $70,000 now.

Other homes are in foreclosure because the owner had medical problems or lost a job. They may have bought the house for $100,000 and only owe $80,0000. They'll sell it to you for $80,000 to save their credit worthiness and integrity even though the home might be worth $110,000 now. That would be a really good buy. You need to look at each situation carefully.
1 vote Thank Flag Link Thu Aug 9, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
It really just depends on the neighborhood,what the house appraise for,what it appraise for,and how much work you have to put in it .
1 vote Thank Flag Link Thu Aug 9, 2007
Charity! I love how you pose a question...then answer it yourself! Brilliant! (Do you think we don't notice???)
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Fri Aug 10, 2007
Cindi Hagley, Real Estate Pro in San Ramon, CA
MVP'08
Contact
I cannot imagine why one would buy a foreclosure ususally the condition is poor and the price is not reflective of condition and market. In shorty NOT a good buy. You can usually do better watching the market with your Realtor.
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Thu Aug 9, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
Contact
There are foreclosures that can be good buys out there...it's just a matter of how much is owed on the property, its current value, it's conditional status, the appreciation possibility, and many other factors. It is not correct to assume that all foreclosures are not good investments without doing the leg work to research the possibilities of a given property. Honestly, in some areas if a home is just now being foreclosed on and it was purchased 3 or so years ago it is entirely possible the owners made improvements, that the appreciation on the property has increased, or the neighborhood has heated up making this area more desirable. I have helped purchase foreclosures that within 1 months time were put back on the market and made my clients quick cash or were rented out until the market heated up and then sold for lots more than they were purchased for. I think its fair to say that research into every purchase needs to be done if you are looking at it in terms of an investment.
0 votes Thank Flag Link Thu Aug 9, 2007
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