First time home buyers especially, and many other buyers are looking at it that Foreclosure and Short Sale will equal a great deal.
This can be true, but in some instances this won’t be true in the long run.
For a foreclosure and a short sale to be a good deal you have to look at all aspects of it and not just the price.
Things you should look at besides the price:
- Amount of Repairs- You have to remember that Foreclosures and Short Sales are “Sold As Is”. That means what repairs it needs would be on you. You have to look at what it would cost to repair the home and make sure that the cost of repairs and sales price doesn’t exceed what it’s worth. Another good thing to look at while we’re on the topic of repairs is how many of them can you do yourself, and how much will you have to hire someone to come in and do.
- Space and Layout-Just because you think you’re getting a great deal on a home, it might not be for the right home for your needs. If a home is to small but you figure for the price we can make it work. You might have to give up a hobby or a den area for your home office. What is the value on something you enjoy or your time if you have to commute to an office.
- You just don’t like the home or the neighborhood Even if it is a great deal, if you don’t like the home or the location that it’s in, and you’re not happy there, is it really a great deal?
- Better buy this great deal before someone else does-After looking at the items above, if it’s too much work for you and your family, or to small, or you don’t like the location, then don’t worry if someone else buys it, it’s not a great deal for you and your family.
- Also take a look at what extra closing cost there might be. Some banks won’t pay transfer taxes, or some other closing cost like notary fees, document preparation and that would be on you. Also if you need seller assist to close a deal most banks won’t offer that either.
Before jumping into any offer just because it might be a great deal, make sure you do your homework. My suggestion is to:
- Make sure you have a buyer’s agent that can help you figure out if it’s the cost to repair would be greater than the market value.
- Also, if you do decide to put an offer in on a home make sure you get a home inspection and have it as part of the offer. Don’t think that just because you and your agent looked over the home well, there is no need for a home inspection.
- I would also advise to get a Home warranty on a home even if you have to pay for the cost yourself. A $500 home warranty could save you $1,000 on hidden problems that might have been missed by you or your agent or in a home inspections. Also remember that problems can come about after you purchase the home that might not have been a problem at the time of purchase. Think of it like your car battery, your battery might be fine when you left for work in the morning but when you come out from work your car won’t start and you have a dead battery. You didn’t expect it to go but it can at anytime.
- Take a contractor with you for a second showing before you put in an offer and get an estimate from him on what it would cost to repair the home.
Don’t worry if you walk away from one deal or someone get’s it before you while you are doing your homework. There is always another deal that will come onto the market and it might not even be a foreclosure or short sale. If you follow these few things you could save yourself from buying a money pit that could hurt you financially.
If you would like more information on foreclosures or short sales feel free to contact me at