buying a foreclosed house to live in??

Question

I have found a foreclosed house in a alright part of town that is listed on the MLS. they are asking 73,500 for the house when comps in the area are 110,000. the drawbacks you might ask, it has a flat roof, which aren't the best sellers in town, needs a new roof, which i have been told by a realtor are approx 10,000 and a new sewer line, which are around 1,500... i love the house and it needs work.. the assesors office values the home around the asking price. the name attached to the property is wells fargo out of north carolina, which is a long way away. what state of forecloser is this house in and does it sound like an alright deal? i don't mind doing the work and i work at an HVAC distributor so i know lots of people. did i mention its original hardwood floors thought out!! what do you think? i am a first time homebuyer so any info would be greatly appreciated!! thank you

wow! great answers! thank you everyone. ok, before i would do anything i would have a home inspection, of course. my uncle is an estimator for Service Master, so thats all he does is estimate various sorts of damage. between the two of us we know people in every trade, so we can buy/have things done in a very cost effective way/. the neighborhood is not bad, just not a ritzy one on the outskirts of town. the floorplan is great! just needs work! i am not a risk taker, but this seems like a good deal. if a foreclosed house is on the market, what does that mean? it has signs up for everyone to see in the yard and has been sitting empty for at least 3 months!

Answer 1

Are you going to live there for a long time? if so then the price for the house is 85K +closing costs. Don't be too impressed with whole house wood floors (focus point to get you to buy!)
Have you done your homework on electrical, plumbing, foundation, tax assessment, termite protection (3-4K easy!)
appliances, gas lines, ect.?
Make sure that you do, because no one likes expensive surprises!
Wells Fargo is a decent mortgage company to be with. They are relatively lenient on late payments.
PS....Don't believe a Realtor, they ARE in it for the money!!!
I would be very cautious about the new roof and the local homes being valued at 110K. I would get the county out to the property and have THEM tell you just how much that new sewer line will run you! They can guide you a lot better than a Realtor!
PSS....How much commission does s/he stand to make?

Congrats! but be cautious!

Answer 2

A big caveat here to think about. Foreclosures are sold 'AS IS' which means if you have a home inspection, you need to know what is wrong with the house, how much would it take to fix it up (cause the bank won't) and is it worth it for the money, and your time and effort to do that, or just go buy another house?

Don't worry about where Wells Fargo is, most often the lender is going to be in another state, they still have to abide by the terms of the loan, and your loan will be with another lender anyway, who may then sell it off to another lender....that is no problem, terms have to stay the same.

Be very careful here about moving forward since this is your first home and have a home inspection that allows you to back out of the deal for any reason whatsoever. Also be sure to get an ASHI certified home inspector as they are usually more experienced if they have this certification. If the home inspector misses something - it is your problem to deal with.

In my area, most foreclosures don't have a spread that far apart ( $73,500 vs a value of $110K) where did you get the $110K value from? Who says so? Comps are a very intricate thing to do, from comparing condition, sq.. ft. property size, amenities, location, etc. Make sure your offer is also contingent on an appraisal at or above your offer. My concern is that if the lender has it offerred for $73,500, they probably know there is enough work to be done that will bring it closer to market value, with a little spread room for your sweat equity.

The other thing I'd be concerned about is you said it is in an "alright part of town'..... is that where you want to live? Don't settle, and don't be in a rush thinking you are going to get a great deal.

Some are, some are not. When it's all said and done, if you buy the house for 73,500, put on a roof, have to make other repairs and end up with $100K in it, is that worth it for you in an ''alright neighborhood"? Or would you rather buy a house in a great neighborhood, do no work and get a good deal on it?

Answer 3

Foreclosures tend to be time and money sinks. I would suggest that you be prepared for an additional $20,000 worth of work over the foreclosure asking price. When people lose a house, they often get upset and trash the place. Depending on how bad the roof is you also might have interior water damage which is always bad.

Answer 4

It doesn't sound like a dab deal to me if you have the money to fix it up once you buy it.
Remember the things that you mentioned to us (flat roof) are the same things people are going to have issues with when you decide to sell. Could effect your resale value, and the amount of time it will take to sell.
Good luck
RE Agent
Remax