What are the benefits and disadvantages of buying a foreclosure?

Question

I'm investigating whether this is a viable option for buying a personal residence. I'm a big believer in "you don't get something for nothing" and figured there was a catch somewhere.

Answer 1

My husband & I bought a foreclosed home last year. We actually looked at several. We chose this house because of its location. It had been vacant for 2 years, and not well maintained prior to that. We knew all of this before we made the offer of nearly 25% less than the asking price (which was low for the area to begin with).

There was some extra paperwork, mostly releasing the bank from any liability for things that did not work. Nothing worked. Our offer was accepted within 24 hours, and it still took 6 weeks to close on an unoccupied house with a cash purchase.

We have been doing renovations since December. We have been doing them ourselves and have saved tens of thousands of dollars. Even with all of the work we have still spent less than 1/2 of the curent market value of similar homes in this area. If we had it to do over, we would.

Answer 2

I have heard (from a Realtor) that buying foreclosed homes can sometimes be a bigger hassle than buying one that is not in foreclosure. I would talk with a Realtor or someone that has bought foreclosed homes in the past to get their input.
Another disadvantage I know about is that you get the house "as is." A house on our street was foreclosed on and it was quickly bought by another couple. That was a couple of months ago and they are still doing repairs. The dishwasher had a leak. The lighting in the laundry room didn't work. The plumbing in one of the bathrooms had to be replaced. They found out that the carpet was ruined underneath so they had to replace that. That is just some of the repairs they had to do. They also had to do extensive cleaning to the house that ended up taking a lot of time and money to finish. They bought the house a lot cheaper than appraisal value, but have ended up putting a lot of money into it to make it live-able.

Answer 3

I assume you mean from the bank. in which case you will need to have your finances lined up and make offers to the bank. You might also need to do light to major repairs.

The advantages are you might get a property below market value. The disadvantages is that you might need to repair the house.

See if this company helps you out any:
http://www.realtytrac.com

Regards