BuyRenovatedForeclosures.com

With so many homes going into foreclosure these days, there has been a lot of attention to getting a great foreclosure “deal.” Let’s take a look at what is really going on with this latest real estate rush. I’d like to share my knowledge in order to help you make a smart foreclosure investment, and keep you safe from the common pitfalls of buying a foreclosure home.

Here is what I see from being out there every day looking at properties. The banks lent on all kinds of houses, both new and old. Many of the newer properties that are now bank-owned are in need of minor repairs: paint, carpet, a door here, a window there. You should always remember the saying “buyer beware,” as things like appliances, heating and air conditioning systems, roofs, gutters, garage door openers, and water heaters can go bad even in a newer house. But if you are handy, or have a brother-in-law like the guys on This Old House, you are probably good to go.

Unfortunately, most foreclosure homes are fixer uppers. If a homeowner was unable to make their mortgage payments, they probably weren’t able to pay for all of the necessary repairs or upgrades to their properties either. Sometimes when people realize they’ll be losing their home, they just give up and stop putting any more money into it, letting the problems with the property’s condition just compound. In the worse case scenario, they may even trash the house on purpose out of anger or frustration.

So here you are, all excited about getting a deal on a foreclosure. It is an old house and kind of had a rough life, maybe even some abuse by the previous occupants. Yeah, it is a little dated and the layout is a little obsolete, but your real estate agent told you it will only cost about $20,000 to make it a place of your own. Since you paid such a low price for the house, the extra money isn’t a problem. Piece of cake!

Ever had sheetrock or plaster dust with your morning cereal?

Ever cranked up the hot water for your morning shower before your long commute to work and got a blast of cold water? Come home exhausted from your day in the trenches, faced with ripping out the rest of that wall you thought was going to be a breeze? How about hauling the plastic bags of construction debris to the landfill in your Prius? But remember, it is only $20,000 to fix the place up, no big deal.

The fact is, choosing a fixer upper foreclosure means investing not only money but a lot of time and effort into a home that is not move-in ready. The renovations will take nearly all of your free time, and you’ll be living in chaos in the meantime.

If you’re willing to put up with all of these things, buying a foreclosure directly from the homeowner or at a bank auction may be the perfect choice for you. If money is the most important factor, you will certainly pay the lowest price going this route. If the value of your time and your quality of life are also factors — like they are for the many people we work with — consider purchasing a foreclosure home from a responsible investor. You will still pay much less than the market price for the house, but all of the repairs and renovations will be completed so all you have to do is move in to your new home.

All real estate investors are not created equal, and you should be careful when evaluating the quality of their work and selecting who to do business with. But that is another whole article…

Tags: bank-owned properties, buying a home, first-time homebuyer, fixer uppers, foreclosures, repairs and renovations

This entry was posted on Thursday, October 16th, 2008 at 11:57 am and is filed under Advice for Homebuyers, Renovations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.