So You Want to Buy a Foreclosure....

BEWARE THE "BARGAIN" THAT IS FORECLOSURES

I hear from a lot of Buyers who are interested in Foreclosure properties. And why wouldn't they be? In a market that is already on the ropes, the Foreclosures seem like they would be the lowest hanging fruit. Juicy delicious and irresistible?

Unfortunately the reality is not always so appetizing.

For one, many times Foreclosure properties are in very rough shape, they haven't been occupied for months and sometimes they have had the heat and electricity turned off.

Who pays to get the lights turned back on? The Buyers.

Because appliances are considered personal property, Foreclosured properties often have NONE.

Who buys the new Stove, Fridge, Washer, Dryer, Microwave? The Buyer.

In Minneapolis there is a time of sale inspection (The Truth in Housing Inspection) and often time in Foreclosed properties there are a number of "R & R's" - Required Repairs that must be taken care of an reinspected.

Who does this - and pays for it? The Buyer.

Because most Lenders are awash in a sea of Foreclosures they are often unable to respond to the offers than Buyer's submit. Even if they are full price.

Also, most lenders like to play by their own rules. They like to make sure all offers include NON-REFUNDABLE Earnest Money (often 1% of the sales price and typically more). So if the Buyer loses his job and can't get financing or decides after the Inspection that the property is in need of too many costly repairs - rather than getting their Earnest Money back like in a normal sale - they lose it.

It's important that you work closely with your agent to identify properties that might be more rouble than they are worth. And Buyer's need to realize that just because a property is in foreclosure or a short sale is possible - that usually doesn't mean the Bank will unload the property for a low ball offer.

While it's true that you can get some good deals by seeking out Foreclosures you need to be realistic and make sure you can be patient while waiting for a response. You'll want to proceed with caution. And remember - foreclosures aren't the only good deal in town. There are a lot of other properties available at just as good a price for a lot less hassle.