what is the good and bad about forclosures?

Question

anyone know about foreclosures? Prices look good but is there a catch?

Answer 1

We're actually putting an offer in on a foreclosed home right now. Here are some myths I have heard and have found out to be untrue:
1) All foreclosed homes are a dump - FALSE! This one just needs some touch up paint. The people had borrowed a lot of money to really fix/update the place nice, then ended up not being able to afford their mortgage and lost the home.
2) Banks do not lower the price - FALSE! We put in one offer, they came back with a counter offer, so we're putting in one more offer. Banks WILL work with you.
3) Foreclosed homes will have attached liens on them - FALSE! In my state, you can NOT sell a home unless all liens have been paid.

Answer 2

The 'catch' is that many times they also come with liens on title, other than the foreclosed mortgage, and you can start to pour money into a tranaction through inspections, pest, appraisals, an attorney to do a title search, etc...and the liens can't be resolved, unless the BUYER is willing to pay them off...if the deal is good enough, some investors will actually do this.

Also, instead of negotiating with an individual, you are dealing with the loss litigation department of a bank, and they plug in your offer into a computer, and decide whether the deal fits their numbers or not, and it can take days or even a couple of weeks to negotiate an offer. They generally will not make repairs, but will subtract them from the sales price.

The condition of these properties, are usually not good, and appraisers have a difficult time getting these through a lender...if the house is trashed, a lender won't loan on it until it's cleaned up, it can't have broken windows, etc. Lenders ask for interior photos on any property that has a foreclosure attached to it.

Sound like alot of trouble? It is...and that is why very few regular folks buy foreclosures, and these usually end up in the hands of experienced investors.

Answer 3

Some forclosures are in terrible shape and some are not. Weve looked at a forclosure that was almost non repairable...EVERYTHING was smashed and walls were ripped out and water damage was everywhere, but weve also seen forclosers that only needed some new paint on the walls. Forclosures are definately worth the time to check into them because you never know what you will find!

Answer 4

There may be liens on the property. You would have to pay off liens to get a clean deed.