What are problems with buying foreclosures?

Asked by Hannah Desmond, Fort Lauderdale, FL Wed May 22, 2013

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6
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Thu May 23, 2013
Good morning Hannah,

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.

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.

Trevor Curran
NMLS #40140

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2 votes
Olga Monson, Agent, Miami, FL
Sat Jun 1, 2013
Buyers are being delusional about foreclosures. They were always told that the best deal was to buy a foreclosure property, but like many other people mentioned above, you are buying someone's else headache. Properties in desirable areas are usually swept away by investors without even hitting the market and the remaining ones are deteriorating without proper maintenance. There are bidding wars for foreclosed properties and sometimes people end up overpaying. I recommend to stick with regular sales where you can negotiate. your terms.

http://www.OlgaMonson.com
1 vote
Susan J Penn,…, Agent, Weston, FL
Sun May 26, 2013
Dear Hannah,

The problem with buying foreclosures is being under a multiple offer situation knowing the highest and best offer will be the one usually chosen to purchase a property. There are many cash buyers in South Florida so the problem is not having the cash to purchase. We are in a limited market with more demand from buyers than supply from sellers, and not too many foreclosures to choose from.

Susan Penn, PA, SFR, CDPE http://about.me/HomesForSale_SusanJPennPA
EWM Realtors® | A HomeServices of America Company | An Affiliate of Berkshire Hathaway
2000 Main Street, Suite 103 | Weston, FL 33326 http://www.susanpenn.com
T: 954.306.7337 | C: 954.557.5993 | F: 954.515.0200 | penn.s@ewm.com | http://www.ewm.com
0 votes
John Bourassa, , Fort Lauderdale, FL
Wed May 22, 2013
First you must have patience to engage in the purchase of foreclosed homes.

I don't know if it is a problem as much as an inconvenience but the indicator that the real estate market reached the bottom at the beginning of 2012 is that the price of homes descended to equal the price of short-sales and foreclosures. Now all lenders are following up the price increases par with the price or non-distressed sales. In fact, you can get a better deal buying an estate sale home that buying a foreclosure because in an estate sale, the inheritors are eager to rid of the house so they can get their cash quickly.

Therefore, why go after a foreclosure and put up with the rigmarole of the lenders antics; they are callously toying with buyers for months when they can buy a non-distressed property less the hassle.
0 votes
Tanya Rhody, Agent, Washington, PA
Wed May 22, 2013
The main issue I have is time. Unlike buying from a "regular seller" foreclosures are very impersonal. There is some person who has never seen the home and probably not even from your area making all of the final decisions. It can take a LONG time to get anything accomplished. You have to be prepared to wait and then wait a little more.
As far as other problems, like mold or whatnot, you can still get your home inspections done just like with a regular purchase. However the foreclosures are generally not going to fix anything. Your agent should protect you with inspection contingencies. Then if you don't like what you see you can back out of the deal and only loose the money you paid for the inspections. Money well spent if there is a true problem.
Good luck with your search for a new home.
0 votes
Gary Hitchco…, Agent, Coral Springs, FL
Wed May 22, 2013
Unknown problems such as toxic mold, code problems, cash investors usually win the deal which can be very frustrating, banks asking you to pay part of the problems, banks wanting above market value, etc.
0 votes
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