Thread: Pros and Cons of buying a foreclosure?

I'm thinking of moving my family about 1/2 hour away from where we live now. We're exploring all options. Although I've never considered buying a foreclosed property before, certainly such properties are "an option".

Has anyone purchased one? I'd like thoughts on the subject.

My understanding from talking with a relative who is a realtor is that the previous owners can leave a foreclosure pretty trashed.

The underlying feeling that I'd gain from someone else's misfortune either from poor choices or events beyond their control isn't pleasant, but I guess I could live with it if need be.

What are the pros and cons in your opinions?

Chris L

My wife and myself are currently looking for a new home. We have looked at foreclosures and the "regular" ones that are for sale. Foreclosures can be trashed. We looked at one that one guy took all the exterior doors. Another one the guy wrote on the wall "F(*&^ the bank". But most of them we have looked at were in o.k. condition. Yes it sucks that they are on the market from others misfortune but someone is going to buy the house. If you appreciate it and take care of the house, then IMHO, all is good. The realtors conned most people into houses that they cannot afford or the people went for an adjustable rate mortgage and then got a balloon payment due or the interest rate changed. GET A FIXED INTEREST RATE. It may be a little higher, but it wont ever change and NO BALLOON PAYMENTS.

Pros: Cheaper UP FRONT cost.

Cons: Often sold as-is, sold as bid and not an offer.

That means you don't get the house inspected before purchase, you buy it with all its problems. Everything in there could be broken. While the bank could be asking 78k for a 190k house be prepared to pay more. If it is a house with little problems, lots of potential in a good area, the bids themselves could be quite near the house's worth of 190k. At least close to 130-150k. So, are you really getting a good deal? Depends on how you look at it I guess.

If you know a General Contractor and have about 20k to put into a house and can afford to make payments on something while not living in it, they can be great.

There is the slight chance you can find a foreclosure that needs little to no work done, but be prepared to bid and bid high. Quite often the cash toting house flippers will win over someone trying to buy their first home. Not always though. Best of luck. Post pics of the house you do get!

My wife and I closing on a foreclosed property on the 9th of July. It's in great shape in a awesome neighborhood. I think the biggest advantage is that we're getting a lot more house for our money. The downside is it's taken 3 months to close on the house. Jumping through foreclosure/bank-owned loops take a very long time.

Now a days foreclosures are much more common(unfortunately) and you can get some killer deals

Is it possible that the person who previously "owned" the house could come up with the money and buy the house back from the bank? Someone told me this was possible but I was fairly skeptical. Is there any merit to this?

Originally Posted by claytor

Is it possible that the person who previously "owned" the house could come up with the money and buy the house back from the bank? Someone told me this was possible but I was fairly skeptical. Is there any merit to this?

That is true but first come first serve

Originally Posted by claytor

Is it possible that the person who previously "owned" the house could come up with the money and buy the house back from the bank? Someone told me this was possible but I was fairly skeptical. Is there any merit to this?

Are you talking about after the sale? If so,
I may be wrong but i believe this can be done only on homes sold for taxes, not foreclosures.

[QUOTE

The underlying feeling that I'd gain from someone else's misfortune either from poor choices or events beyond their control isn't pleasant, but I guess I could live with it if need be.

As a former 'victim' of a foreclosure, I wouldn't feel bad about what sme might consider benefitting from another's misfortune. You didn't take their home from them, the bank did. The attitude I took was that the bank didn't take my home, I gave it back to them. Not that I had a choice, but hey, fair is fair. I knew the risk and it's up to me to live with the consequence. If someone else got a good deal from it, more power to them.

(Incidentally, I've completely recovered financially. There is life after bankrupcy.)