First-time homebuyers are nervous about "paying too much" for a home these days. Foreclosures can sound like a good idea, but are they really a wise investment?
Study the average price for a home in the neighborhood of the foreclosure. If the average price in the area is $200,000 and the foreclosure price is $150,000 it sounds like a bargain, right? Maybe not. Foreclosures have a reputation for being in terrible condition. Many have been stripped of their copper wiring, light fixtures, cabinets, appliances, and plumbing fixtures. Carpets can be terribly stained, pools unkempt, and windows broken.
A home isn't necessarily a bargain if you must immediately invest $50,000 in cash to return it to livable condition. Plus, properties will not qualify for financing if they do not meet minimum living standards.
If you truly want to look at a foreclosure, ask your REALTOR to also show you owner-occupied homes for sale in the neighborhood to compare condition and price and then decide if the foreclosure is the bargain you'd hoped for.
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