| There is more involved than what meets the | | | | condition, the way you see it. You can have |
| eyewhen considering the purchase of a | | | | a home inspection, but you can't ask the bank |
| foreclosure | | | | to make any repairs to defects found or |
| | | | credit any money back for such repairs. Once |
| Once the realm of only seasoned real estate | | | | you have a contract, you can't get out of it |
| investors, the interest in purchasing | | | | because you discovered a major defect and the |
| foreclosed properties has fanned out to a | | | | bank refuses to correct it. |
| growing number of ordinary home buyers. As | | | | |
| the sub-prime lending fiasco continues to | | | | If you do your homework, however, and are |
| push homes into foreclosure and news stories | | | | smart about the whole thing, there are |
| appear everywhere about the record number of | | | | bargains to be found from time to time. |
| them hitting the market, many prospective | | | | Since you never know what a property's true |
| home buyers are eyeing these properties as a | | | | condition is by a cursory inspection, it |
| way to get a lot of house for little money. | | | | makes sense to hire a home inspector before |
| | | | you submit a purchase offer. That way you |
| There seems to be a big misunderstanding by | | | | will know what repairs need to be made and |
| the public, however, about the value of homes | | | | you can then find out the cost to make |
| that have been foreclosed. People tend to | | | | repairs and easily determine if the asking |
| think that a foreclosed home presents a | | | | price of the house is worth the repair |
| bargain, especially those who are looking for | | | | expense. A lot depends upon if you are going |
| real estate investment property. They think | | | | to live in the house yourself or if you are |
| that they can buy a foreclosure cheap, do a | | | | going to flip it or rent it. A foreclosure |
| little fixing up, and sell it for a hefty | | | | is much more risky if it is purchased for |
| profit or rent it out or even keep it for | | | | investment purposes than to live in. |
| their own home, expecting to reap instant | | | | |
| equity. Well, it doesn't work out that way | | | | The more thoroughly the house is inspected |
| very often. | | | | and the neighborhood and market researched, |
| | | | the easier it is to make a decision on |
| Out here in the trenches of real estate, I | | | | whether a particular foreclosed home is right |
| have been seeing an increase in foreclosed | | | | for you. Remember, when a house has been |
| homes dumped on the market and the number of | | | | vacant for a long time without regular |
| people looking for such homes who are | | | | maintenance, which is often the case, even a |
| expecting to purchase one for pennies on the | | | | home inspector can miss damage that is not |
| dollar. I have home buyer clients who | | | | apparent, but may be lurking behind walls and |
| specifically want to evaluate only | | | | floors. Leaking water, vermin activity, and |
| foreclosures or HUD homes, those offered by | | | | rot can occur in areas not visible to even |
| the government, usually by a bidding process, | | | | the most thorough inspection without tearing |
| because they want a house that they can buy | | | | out walls. These latent defects can manifest |
| cheaply and work on it while living in it. | | | | themselves at anytime and cause extensive |
| As it turns out, most end up buying a | | | | damage. Consider also that many foreclosed |
| conventional home once I show them a couple | | | | homes were neglected by the previous owners, |
| foreclosures and they begin to understand | | | | adding to the possibility of unforseen |
| what they are up against. | | | | problems. I see this out here in the field |
| | | | all the time. |
| Banks are not stupid. They know the value of | | | | |
| real property and are not about to give it | | | | If you are determined to buy a foreclosed or |
| away. It's an asset to them, not a | | | | HUD home, do your homework. Work with a |
| liability. When they have to sell a home | | | | competent real estate agent and know the real |
| that they have repossessed, they offer it at | | | | estate market, the condition of the property, |
| market value, not necessarily for what is | | | | and the cost to make repairs. No matter what |
| owed on the house. The first thing they do | | | | your objectives for buying a foreclosure are, |
| is send a certified real estate appraiser to | | | | get the facts. That bargain property could |
| the property to determine a fair market price | | | | turn into your worst nightmare. The old |
| based on comparable homes sold in the area | | | | adage of "Buyer Beware" certainly holds true |
| and any defects that may be present in the | | | | when it comes to buying foreclosed property. |
| home. Whatever figure the appraiser comes up | | | | I could tell you horror stories. Stay tuned. |
| with is what the house will be priced at. | | | | I may relate a few in future articles here. |
| And it isn't cheap. | | | | You can get some helpful information on the |
| | | | subject for free at one of my favorite real |
| It is true that many foreclosures are priced | | | | estate websites, . |
| lower than seemingly comparable homes in a | | | | |
| given area, but they are almost always in | | | | There are going to be more foreclosed homes |
| very poor condition, sometimes requiring | | | | coming on the market over ensuing months and |
| extensive repairs. And this is where the | | | | there will be some excellent pickings if you |
| danger comes in. Foreclosed properties are | | | | know how to spot and properly evaluate them. |
| sold "as is", meaning that when you buy the | | | | Move fast when you do find one. You're not |
| house, you have to take it in it's present | | | | the only one eyeing that property. |