Buying a Foreclosed Home: Pros and Cons
Buying a Foreclosure Pros and Cons
In recent years, a record number of foreclosures have hit the Real Estate Market. For price-conscious homebuyers, properties in foreclosure are an enticing opportunity. Before you jump on the bandwagon, stop and think about some of the risks and benefits and learn whether or not investing in a foreclosure is a good opportunity for you.
Before making the home buying leap consider the following two questions:
Do You Have Prior Homeownership Experience?
Homeownership isn’t always a walk in the park, especially when it comes to a foreclosed home. When sellers realize they are about to lose their home it is common for them to leave the property in disarray.
- Disgruntled owners have been known to destroy the house. In some cases even knocking down walls and deliberately flooding the home.
- Owners will sell everything from the appliances, kitchen cabinets, and even the copper pipes.
- There can be a variety of problems such as mold, broken HVAC, termites, etc..
Often times the home is purchased “as is” from the lender or HUD and there is no guarantee of condition. It helps to have already owned a home and learned the cost and lessons of owning a home. If you do decide to buy a foreclosure be sure to make relationships with home contractors and other professionals here to help you.
How Solid is Your Financial Situation?
A foreclosure property can be a great investment if you have the resources to put into fixes/repairs. If you are not prepared for the potential costs, it might not be worth it to invest in troubled properties that are too run-down to apply for Federal Housing Administration or even conventional mortgages. If you are thinking of buying a foreclosure the best thing to do is talk to a professional and start the steps of being pre-approved for a mortgage.
Pros of Buying a Foreclosure:
- You may be able to purchase a home at a lower-than-market value price. Often homeowners who are looking to avoid going into foreclosure will sell in a hurry, putting buyers at the advantage.
- With some repairs and upgrades you can see a large appreciation in the properties value
- Foreclosures can be found at several price points, including luxury homes that have only minor repairs.
Cons of Buying a Foreclosure
- There is often steep competition from other bidders/buyers
- What may seem like a large discount at first, isn’t; the property may require major repairs and fixes
- Buying a foreclosed home at auction has several risks such as not being able to inspect the home before purchase.
- Some lenders don’t offer loans for distressed properties
- The home is likely to have major maintenance issues from sitting vacant for long periods of times. This includes frozen pipes, mold, and termite damage.
- Property could be sold as is and banks often aren’t interesting in footing the bill for repairs.
In conclusion, buying a foreclosure can be a good investment if you are the right candidate. For some the low home price may be enticing, but without the proper knowledge and funds for repairs, it is highly likely that you will put more money into the home than if you purchased a non-foreclosed property.
If you believe you are the right candidate for buying a foreclosure property, call us today! The Kris Weaver Real Estate Team is one of the few companies in the area that works with banks to handle their REO properties in the market. We have a team of experienced professionals that know the local laws of the real estate market and specifically how they apply to the foreclosure system.
Search Hampton Roads Foreclosure properties here: http://www.krisweaver.com/results-gallery/?status=A&feature=BO&sort=popularity