Why buy a foreclosure needing major repairs, rather than a regular sale?

Asked by Lynn Brock, Sarasota, FL Sat Jul 14, 2012

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Annette Law…, Agent, Palm Harbor, FL
Sat Jul 14, 2012
BEST ANSWER
The opportunity to make GREAT BIG BUNCHES OF MONEY are more likely to exist with a trashed foreclosure than a regular sale. Did I mention GREAT BIG BUNCHES OF MONEY?
Of course,,,,you need to have a bit of skill
Right price
Right ARV
Right market environment
Right exit strategy
No less the $25,000 profit an each deal. Most do much, much, better.

Unfortunately, the citizen buyer will see 'Great big bunches of money' and think that is exactly what they want to do and will find themselves in deep, deep trouble.

If you are an experienced, successful flipper, REO can be good. If you are a weekend handy man, this can become a incredibly costly trap.

Great Big Bunches of MONEY! .. 'What's not to like?"

http://www.RealEstateMadeEZ.us
1 vote
Jeanne Gleas…, Agent, Apollo Beach, FL
Sat Jul 14, 2012
Lynn,
You're a broker. What's up with the question? The answer to the question, at face value, would be...you are foolish to buy a house in forclosure needing major repairs compared to a regular sale. The next part of the question would be...location, price, timeline, and financing.
1 vote
Alma Kee, Agent, Tampa, FL
Sat Jul 14, 2012
Fannie Mae has a HomePath renovation mortgage that works great because the buyer must have a contractor do all of the work. I had a buyer that ended up with a model perfect home and instant equity and didn't have to lift a finger and only had to put 3% down. A win, win, win, win situation in my mind.

There is also the HomeStyle Mortgage for non-Fannie Mae owned properties that works similarly. I haven't been involved with a HomeStyle yet but one of my clients is thinking of going that way to be able to end up with a beautiful home in their chosen high demand area.

All the best,
Alma
Alma Rose Kee, PA
http://www.SoldOnTampa.com
0 votes
Bill Eckler, Agent, Venice, FL
Sat Jul 14, 2012
Lynn,

You bring up an interesting topic, one that today's buyer should consider more seriously. Unfortunately, most buyers are not as informed as real estate professionals and understand that each property regardless of whether or not it is a foreclosure, short sale, or a regular sale has its own merits.

With this said, many of today's buyers that are bent on targeting only one portion of the real estate market may be losing out on other excellent possibilities. Buyers would be well advised to explore the entire market relative to value, no just distressed sales.

Respectfully,

Bill
0 votes
Don Tepper, Agent, Burke, VA
Sat Jul 14, 2012
Ummm . . . why not?

If the price is right--if the price more than accounts for the needed major repairs--and the property otherwise suits one's needs (location, size, etc.), then it makes a lot of sense to.
0 votes
Darrell D. D…, Agent, Schertz, TX
Sat Jul 14, 2012
Exactly what Stephanie said. Most foreclosures are sold at cost and sometimes even lower just to clear them off the books. Sometimes, they are listed at comparable price points. But often, especially when they need repairs, they are listed considerably lower than similiar area homes. This means with a little elbow greas and knowledge of construction, you can make the repairs needed and get an awesome deal.
0 votes
Stephanie Da…, Agent, Apollo Beach, FL
Sat Jul 14, 2012
Well depending on your situation it could be a plus. You can get a foreclosure home with lots of potential for a steal and if you are in that line of work or know someone that can do the repairs for a little of nothing than that would be a great investment for you. However on the other hand, if you are purchasing to move in right away and you have no connections with anyone who could do the repairs for you at a low price, then you would do better purchasing a regular resale or new construction with little or no repairs needed.
0 votes
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