Jan

5

Foreclosured Homes: Are They Really A Good Buy?

Filed Under Buyers, Foreclosure Info |


Share
Time and time again, I have people calling me or emailing me about foreclosed homes. I reply to alot of posts on trulia.com, where home buyers and sellers can ask questions about real estate and I find alot of people asking about foreclosures. So what’s all the hub-bub about anyhow? Are foreclosed homes a good buy or not?

I’ll provide an example. In Deer Park, there is a very nice colonial, priced at $319,000. It is a foreclosure, which means that it is bank-owned. Please note that a foreclosure is an “as-is” sale, where the bank is making no representations and is not going to do anything to rectify any problems with the property, whatsoever.

Now this nice colonial for $319,000 compares with other colonials in the area and they are priced in the upper $380,000 to $450,000. That’s a big difference.

But let’s take a closer look. This is where I like to really help potential buyers get the full picture. Now, at $319,000, this house, without getting into too many details, needs about $40,000 worth of work…that we can see. This doesn’t include any c/o (certificate of occupancy) issues or unseen problems with plumbing or heating systems.

If the asking price is $319,000 and we assume that we can purchase the property at $300,000, with the additional $40,000, plus another $15,000 just to be safe, this would put the total cost at $355,000. Since we assumed a $19,000 negotiable range on this foreclosure, lets apply that to a “normal” house for sale at $380,000. So a “normal” colonial, with only minor updates needed, would cost $361,000, assuming the negotiable price range of $19,000 (same as the foreclosure).

That’s a difference of $6000.

I am not trying to discourage any buyers from considering a foreclosure purchase. Not at all. However, the majority of foreclosure listings are still priced along with the rest of the market. When all is said and done, a foreclosure may not be any different from your average regular listing.

A number of issues should be understood by any buyer who considers purchasing a foreclosed property. Should you have any questions, please feel free to leave a comment or contact me directly at 631.831.9048.

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, Licensed Salesperson



Comments

Name (required)

Email (required)

Website

Speak your mind