Specifically, educate me on the pros and cons of buying a foreclosed property. What should I be leary of? The property in question looks good on the real estate site, but only has one picture. The description raises no red flags (I stay away from places that say “sold as-is” or “no disclosure”).
I’m doing a drive-by this weekend, to make sure of the neighborhood, etc, but nothing beats seeing the whole thing and getting it inspected. I just don’t want to do that yet, until I’m closer to being sure that this is the one.
Lots of y’all are way more knowledgeable than me in this area - please share your hard-learned wisdom.
UPDATE: 2 June: Thanks everyone for your input. Please don’t stop. 
I drove around the various neighborhoods today, and eliminated most of my possibilities. Then I stumbled across a FSBO property that is darn close to perfect. My two biggest issues with it are (1) the listing states lot size as approx 1.25 acres, and county tax rolls state lot size as .9 acres. Which do I believe? (2) It’s not fenced, so I’ll need to figure out how much fencing I can afford, so my hounds will have a secure place to run.
Depends on whether you’re going to buy it to live in, or buy it to renovate and resell. If you’re going to live in it, you’re going to want it in very workable shape right off the bat, while if you’re going to flip it, you’ll be willing to accept certain things that aren’t okay. (Plumbing’s a biggie.)
DEFINITELY get a GOOD home inspector, turn him loose and get a good idea of the state of the house. Trust your gut about the neighborhood - but if you’re not going to be living there then it’s not quite so critical.
Good luck to you!
Comment by JLawson — 20070530 @ 2235
It’s to live in. And I’ve been hearing some horror stories of what bitter foreclosees have done to houses they moved out of (numerous sandwich bags of concrete flushed down the commode, for instance). It’s enough to make my hair stand on end.
One property I’m looking at is recently foreclosed, another is in pre-foreclosure (but under a contingency contract), and 2 others are not foreclosures at all, and thus a little pricier, but still inside my allowed price-range.
The one I really really like is just a tad bit farther than work than I’m comfortable with, but everything else about it is fantastic, assuming it’s in good shape.
With 20+ years of moving from apartment to apartment, I’ve gotten fairly good at gut-instincts on the neighborhoods. The last house I bought was one I’d been renting for a year, so I knew what I was getting. That made it a no-brainer.
This one, I have to do homework and research and all that important stuff.
I’ve got a realtor lined up who will take me to look at the ones I’m interested in, but I have to be in town first, and lately I’ve been living on the road. So all I know is what I’m finding online, and on the county tax records.
Comment by AProudVeteran — 20070531 @ 0847
Look up the legal rights of the previous owner in your state. In many states they have a legal right to make good on the mortgage for a period of time AFTER the foreclosure auction. You might have to pay them “key money” to give up that right, because no bank will lend on a property so entailed. Then there was the guy recently who put several hogs in the house for a couple of weeks as he was being foreclosed on.
In a bigger sense, the subprime implosion has really just started. With NODs and foreclosures exploding, you’re likely to get more choices at better prices a year from now IMHO. There would seem to be little reason not to wait, unless this particular, individual house is the house of your dreams that you’ve been waiting for years to come on the market.
Comment by Jim A — 20070531 @ 1105
That’s an interesting thought about the sub-prime implosion.
For me, the time is now. I’ve been in apartments ever since I moved to GA, and I’ve been wanting to be in a single-story house (or split-level) ever since my retired mama dog started limping regularly from her arthritis. That’s been a couple years now, and it’s just too hard for her to do stairs anymore. That has us relegated to living on the first floor of my townhome, and sleeping on the sofa is killing my back.
So when my lease is up, I’m moving us into a house with a bedroom on the main floor.
Comment by AProudVeteran — 20070601 @ 0548
Funny— I run the board for a real estate program and this question came up last week. Definitely get a good inspector— or, alternately, a contractor who will give you a cost estimate. But also make sure things are square with the county, because un-permitted work can come back to bite you, hard.
Also make sure that you have a firm offer in mind that you won’t go above, as auction fever gets a lot of people when buying foreclosures. No matter who’s selling, they will try to get you to pay better than market price. And try not to fall for it too hard, since they’ll sense that and drive the price higher.
Yes, it’s a foreclosure. But they still try to get their bucks. And the guest on the program, whose job is in foreclosures, mentioned that foreclosures are only a deal if you know what you’re doing. Otherwise they can be just the same as regular real estate and NOT a deal.
Comment by B. Durbin — 20070601 @ 1257
I drove out there today and looked at it. While I like the external view of the house, the neighborhood, etc., the location is a bit too far out for me. It would be fine if I did nothing but telecommute, but there are weeks when I have to be at the office by 830, and this would be an easy 90 minutes BEFORE traffic. So it’s off my list. As is the one under contract, and another that intrigued me until I saw its neighborhood.
That said, while driving around out there today, I ran across a FSBO house that I fell in love with. It sounds pretty darn close to perfect, so I’ve contacted the owner via email and asked when I could view the house in person instead of just staring at it from the street.
Comment by AProudVeteran — 20070602 @ 1908