Should a first-time homebuyer intent on purchasing a residence, not an investment property, avoid dealing with foreclosed homes that go on auction?

Asked by anna.applegate, Chicago, IL Tue May 21, 2013

Are those generally homes that require considerable repairs/rehabbing that are more geared towards seasoned investors?

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12
Nicholas Rad…, Agent, Chicago, IL
Tue May 21, 2013
"Generally" those homes are more geared towards a seasoned investor, but not always. As a first time buyer you need to conduct your search hand in hand with an experienced Realtor. Our job is to make a confusing process, pleasant and financially beneficial to you. We have a great deal of experience, take advantage of it.
Nick Radakovich Home Sales Realty
1 vote
Philip Sencer, Agent, Chicago, IL
Tue May 21, 2013
Auctions are a horrible way to buy anything. They tend to represent property that have 'issues' and the contract you are forced to use favors the seller and gives you no wiggle room. Consult an attorney before tring an Auction. There are lots of REO's that at put ont he MLS. My web site has information on what I do for my buyer clients
1 vote
Bill J Delig…, Agent, Naperville, IL
Tue May 21, 2013
Anna,

It depends on your appetite for risk and how much you want to get involved with the nitty gritty of possibly rehabbing a property.

There are good deals at auctions, but you will have MORE protection by purchasing a home through the standard route.

Get Pre Approved and work with a Realtor.

Feel free to contact me should you need any assistance.
1 vote
Pete Burke, Agent, Schaumburg, IL
Tue May 21, 2013
Although the homes at auction can be great deals, the details of the contract required for the winning bidder will answer your question. Many auctions will not allow for a financing contingency. If you are financing your planned purchase, you are taking a huge risk with that type of contract. You should have a real estate professional working for you along with a great real estate attorney. If you continue to work in this complex buyers market without the benefit of a great agent and attorney, you will increase your risk of making a hugely costly mistake! I have purchased foreclosed property at auction and it has worked out very well because I took the time to learn the terms of the sale in advance!! Best of luck with your purchase!

Pete Burke, SFR, CPA, MBA
Chicago IL
312-399-0831
1 vote
, ,
Tue May 21, 2013
Hello Anna
Im not sure if there is a general rule of thumb - but I can tell you that I have worked with several buyers who have purchased at auction and I have seen this go both ways.
I would recommend keeping your options open and seeing whats out there.
Sam Sharp
Senior VP of Mortgage Lending
Guarnateed Rate
773 290 0455
1 vote
Joe Schiller, Agent, Chicago, IL
Tue May 21, 2013
you are so far over your head the life gaurd should be called.. come into my office at north and clybourn and lets get you set up....seriously.. way over your head on a variety of points including shoping on Trulia which is 3 months behind the market
1 vote
;-)
Flag Tue May 21, 2013
Manuel Brown, Agent, Chicago, IL
Tue May 21, 2013
Anna,

Great question! In short if you are going after a foreclosed home in auction you may be faced with many repairs. That being said many home do not require many repairs. However, you will be up against my investors who go to the auctions with cash ready to buy, condos, and homes they know they can flip or rent for a profit.

If you the time and patients you may find the diamond in the rough.

You can also consider finding a short sale. You must have patients and work with buyer’s broker that has worked on short sales in the past.

Best of luck.
1 vote
Nicholas Rad…, Agent, Chicago, IL
Tue May 21, 2013
Anna,
You answered your own question--"I am adverse to risk". I have seen some good deals at real estate auctions, but there certainly is a lot more risk buying at an auction rather than a "normal" transaction.
Nick Radakovich Home Sales Realty
0 votes
Geoff Ommen, Agent, Barrington, IL
Tue May 21, 2013
There is a big difference between auction and foreclosed. Your agent will share with you the pluses and minuses of each of the transactions. Even though an auction home may represent a better overall value, a first time homeowner is probably not equipped to look at the issues or tackle the potential problems correctly.

Geoff Ommen
Broker Baird & Warner
847-271-2622
geoff.ommen@bairdwarner.com
http://www.geoffgetsit.com
0 votes
Bill J Delig…, Agent, Naperville, IL
Tue May 21, 2013
Speak with your LENDER and if your finances are solid and the home looks good, then go for it. If you know the neighborhood and home, then your risk is slightly less.
0 votes
, ,
Tue May 21, 2013
I have a conventional renovation program that would allow you to finance the cost of the work into the loan. It can go up to 95% of the purchase price plus the cost of the work. Please feel free to email me if you have more questions on that program to see if you would qualify!
Thanks
Jim Pontious
Mortgage Banker
jim.pontious@phhonline.com
0 votes
anna.applega…, Home Buyer, Chicago, IL
Tue May 21, 2013
Thank you all for your responses! I am working with a real estate agent, but since this one foreclosure is only a couple of streets away from my current home, and thus I know the block intimately and the house looks in as good as shape externally as its occupied neighbors, I thought I would throw the question out there. However, I am averse to risk in this kind of a situation and certainly am not a cash buyer and prefer the path of conventional financing. My best wishes to whomever gobbles up such a nice classic Chicago bungalow, though! ((sighs))
0 votes
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