So you think buying a foreclosure is a great deal huh? It could be, but it’s probably not. When looking at the price and photos the general rule is what your mom always told you…
“If it looks too good to be true it’s probably full of mold” LOL
Lets start with defining foreclosures. The industry term is “a bank owned property.” They are houses that were foreclosed on and the bank has taken ownership (not fake foreclosures on Zillow.)
The bank is the seller selling the house through a Realtor. There are exceptions to every rule but in SOMD here is what we have found.
- PRICE They generally do not negotiate the price more than 1-2%. They will start high and drop every 30 days until it sells.
- PAYING BUYERS CLOSING It’s hit and miss on if they will pay closing costs. Most of the time its yes 3% max other times you can offer over full price and no closing help regardless.
- REPAIRS Almost always no. Here is the big catch where most buyers needing financing get stuck. There are lenders (pssst we have the best!) who can work around these issues but if you can see sunshine through the roof you probably are never getting financing.
- BEST DEAL? Of course the answer is “it depends” but most of the time no. I will even go as far as to say no for people buying a home to live in and investors. In 2018 there are too many people trying to be the next HGTV house flippers that its rare to find a professional flipper purchasing from the MLS.
- VERDICT? Almost always overzealous buyers who start looking at foreclosures find the houses are priced according to the money/time/headache/difficulty getting financing involved and …move on.
Foreclosures have worked best:
- When we set up hourly alerts and put in the offer within hours of it hitting the market. (A great working relationship with agents who sell a lot of foreclosures helps a lot Hi Bill!)
- Houses that need appraisal repairs where our creative efforts and our mortgage lenders ability to finance repairs on Govt Loans keep us in a deal other buyers can close on.