Jeff’s Carlsbad Blog for First Time Home Buyers


To Buy or Not to Buy a Foreclosure

Posted in Due Diligence,House Hunting,Realtor's Job,What do I Buy? by Jeff Dowler on February 23, 2007

This is a tough issue, especially if you are a first timer. The decision to buy or not to buy a foreclosure can have implications.

On the one hand, given we are seeing more and more foreclosures, ignoring them may mean missing out on a potential great deal. Some of the these homes, depending on the reason for the foreclosure, are in great shape and you MAY be able to buy them at less than market value.  So don’t pass them by without doing some research.

But keep in mind the following. There will likely be multiple offers and lots of interest, so the price that the bank will accept can rapidly escalate. And often the bank has a price they will accept and nothing less. Also, banks will not, in my experience, do any repairs so you are buying AS IS. So doing an inspection, if you have the time and opportunity, is important so you know what you are getting. But the bank will not authorize any repairs, which likely will also include the termite inspection and corrections we see here in California. So, the question becomes – can you buy this property that needs work for less than market, and are you willing and financially able to fix it up?

Oftentimes owners who are foreclosed will trash the house, take and sell the appliances, and worse. So make sure you can tour the home and understand fully what you are getting. It may not be worth it compared to other comparable homes on the market.

I am not telling you to NOT buy, but to do your due diligence carefully, with your agent’s help and knowledge. A foreclosure MAY or MAY NOT be the right thing to do. Don’t make this decision hastily.

Have a great weekend.

Jeff

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