Thinking about buying a foreclosed property?by Tim Manni
With many markets saturated with foreclosed properties, more prospective homebuyers are taking a closer look at these types of properties than ever before. Purchasing a foreclosure isn’t just a simple matter of scoring a dirt-cheap bargain, however. What should you worry about — or not — when buying a foreclosed property?
Foreclosures being sold by banks have long been an attractive opportunity for real estate investors. But today, these homes are so plentiful in some markets that many consumers are purchasing them as primary residences.
The big attraction of purchasing a foreclosure is the expectation that it can be bought at bargain-basement prices. Whether that expectation holds true depends largely on local market conditions and what Keith Gumbinger, vice president of HSH.com, calls the “desperation factor” of the bank that needs to sell the property.
“A bank isn’t going to give a property away,” Gumbinger says. “But it’s possible that, relative to other homes on the market with similar amenities, the price may be a little bit cheaper.”
The reality is that banks may price aggressively to create interest in a property, but homes that are thought to be a good value will then attract multiple offers and ultimately sell at the market price, explains Brad Snyder, a REALTOR® with ZipRealty in Las Vegas.
Foreclosure properties can range from ready-to-move-in condition to fixer-uppers. At any point on that spectrum, buyers should be prepared to “overlook all cosmetic issues” and “save some cash” to make their own repairs, Snyder suggests. Banks might — and the word “might” should be emphasized — make some — and the word “some” should be emphasized as well — repairs, but nearly all foreclosure homes are sold strictly as-is.
Be sure to continue reading our latest article, “Buying a foreclosure? It’s more than just cheap real estate.”