There's been A LOT of attention by the media lately regarding the mounting numbers of foreclosed properties that are available on the market. Recently there was an auction held were something like 150 metro area homes were auctioned off. Consequently I have been getting lots of calls from my clients asking if these deals they are reading about are too good to be true.
My short answer is - yes.
If you look closely at some of the deals mentioned recently in the Strib you will see that while it's true some properties sold at auction for perhaps as much as 50% less then they sold for just a few years ago there are factors that were really glossed over.
1. ConditionMost foreclosure properties are a mess. It takes a keen eye to separate the simple problems that can be fixed by a lay-person and the complex ones that might require lots and lots of money and time to fix.
2. LocationMost of the Super Bargains mentioned in the story are in locations that have seen rough times. Sometimes that means a higher crime rate and potential property damage. So not only did you just buy yourself a bunch of repair headaches you also might have found yourself in a location that will make it
very difficult to recoup the money you spent fixing the place up.
3.Over-Priced HomesPeople may want to ask why these "deals" look so good now and the answer is during the Boom there were quite a few properties that sold for way above market value. Then -BAM- the market slows down and the real market price re-emerges. Often times people believe that what goes
down must go back up again -and fast - that the price will jump back up again in a few short months.
Unfortunately it doesn't work that way. Not usually. The steep rise in prices we saw from the late 1990's thru the early 2000's didn't happen over night. It takes time. Patience, Grasshopper. That is part of the reason we find ourselves in this current state: unrealistic seller expectations.
Will prices go up?
Yes. They always have and they always will OVER TIME. You need to have that essential ingredient. Real Estate is NOT a get rich quick scheme.
How can you increase your odds?Pay close attention to LOCATION and CONDITION.
Especially LOCATION, LOCATION, LOCATION! It's a cliche' for a reason. It matters! You can have the greatest house in the world but if it it in a tough location - Good Luck! And in a market with so much inventory (read: Competition) you have to be in absolute Tip Top Condition. The cheap fixes no longer work. Buyer's can sniff out quality finishing. Shabby, mismatched kitchen cupboards? Nope. Worn Carpet? Get rid of it. Outdated appliances? That's a No-No.
If I sound harsh I don't mean to be but just because I'm a Realtor doesn't mean I can't be Real! Contact me for more tips on how you can afford the pitfalls and have success in this changing and challenging market.
