Wednesday, March 18, 2009

Buying a Foreclosure Property

Tennessee has the 11th highest number of foreclosures in the United States. If it weren't for Memphis, then Tennessee wouldn't even be on the map, but that doesn't mean that Nashville is devoid of foreclosures.

Foreclosure prices range from under $50,000 into the millions for homes in our area. Yes, even Brentwood has been touched by the foreclosure market.

Many people think that buying a foreclosure is the way to go. In fact, many of the calls I receive are inquiries about buying foreclosure properties. Banks do not like to own properties through foreclosure. For them to foreclose on a house costs them anywhere from $30K to $50K - not a great investment for banks these days.

If you do find a foreclosure you want to purchase, there are several things to keep in mind:
1 - You have to move quickly. Foreclosure properties are priced to sell. If you don't go get it, someone else will. There's no time to waste.

2 - Foreclosure properties are sold "as is". Buyers can hire a home inspector to do the inspection, and can even include a contingency based on the outcome of the inspection, but banks will not do any repairs to the house.

3 - Sometimes the properties are in great condition; other times they are in very poor condition. Former homeowners will sometimes take the stove, copper wiring, carpet, dishwasher, faucets, lighting fixtures, etc. from the house when they are required to evacuate the premises. And there are the houses where the pets have been allowed to wet the floor, so the stench is horrible. I've seen immaculate to uninhabitable.

4 - Many times banks will not pay any closing costs, title insurance, the termite inspection or other expenses related to the sale of the property.

5 - Do not plan on a quick answer to your offer. While the process is getting quicker, it still may take up to 60 or even 90 days for an answer. Even when there is a closing date, the seller (bank) may not have the deed ready so the house cannot close on time.

6 - If the buyer is not on top of things and the closing is late due to the buyer or the buyer's lender, the seller may charge the buyer a daily fee for the late closing.

So, are foreclosures a good deal? Yes, but buyers need to be well aware of what they're getting into. A good real estate agent can help buyers who want to pursue this type of invesment. If you need a knowledgable agent who can walk you through this process, please give me a call. I'm here to help.

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