Foreclosures are the hot topic of the . . .day. . . the month. . .maybe the year! Are they really worth it?

In general, foreclosures are homes that sell for lower prices than other comparable homes in the neighborhood. This is primarily due to the fact that lenders want to get rid of the house and takes into consideration the drawbacks of the property. These can include poor physical elements in the house, non functioning structural units, bad location in the neighborhood (backs up to a major roadway), etc….. In my experience viewing properties in foreclosure, most are very unappealing. A lot of them have been sitting on the market for up to 18 mths or longer. The foreclosure process is so lengthy that by the time a lender is able to legally get the homeowner out of the property, a lot of damage has been inflicted on the property due to ticked off and desperate owners. If they were fantastic homes in good condition, they would have sold at the lower price much sooner.

Don’t be naive and think these homes are sold for next to nothing. Contrary to what many people think and what the late night TV infomercials lead us to believe, lenders turn down “low ball” offers all of the time. They don’t really just give away properties! And, the time it takes them to decide on a reasonable sales price, you could be waiting up to 90 days to hear a response (where did the term “short sale” come from??)

In addition, many of these homes are sold “AS-IS”. Lender do not typically make repairs. They are losing money as it is. A homeowner being kicked out of his house has no incentive to maintain it….usually can’t afford to even if they wanted to…. and again, are quite resentful and seriously damage the house. I have seen ceilings with new “skylights”, electrical wiring ripped out, and doors missing. I have spoken to Realtors who have seen properties in foreclosure where concrete was thrown down sinks and toilets, walls were kicked in, and windows were smashed.

When buying a foreclosure you need to do your homework. Make sure you get the property inspected and analyze the condition of the home and know the extent of the repairs. The money you thought you saved buying one of these properties could easily become a fortune in repair expenses. You might have to replace the roof or the A/C, remove mold, not to mention everything inside the house.

Be wary of auctions. In many auctions, the lender will not allow bidders to have the property inspected prior to bidding. A buyer could easily end up with a money pit, and end up in big trouble after all of the repairs. As the saying goes, “if something looks too good to be true. It probably is.”