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Foreclosures–Don’t Buy Into the Hype
Be forewarned, that the evening news, websites, radio shows, TV programs and foreclosure bus tours that tout foreclosures can be purchased for a bargain, or worse, that they will make the purchaser wealthy in coming years are little more than “paid for” hype. Don’t buy it.
In my 25 years of real estate experience, I have discovered that for the most part, foreclosures are no bargain. They are laden with serious problems and lengthy delays, making them “deals” for only those pro’s with patience and a strong stomach.
Foreclosed homes are not wonderful, like the media would have you believe. The large asset departments that handle foreclosures (REO’s) are managed by employee’s with hundreds of files and no incentive to help the sale close. They don’t care if the property sells or not, they earn their paycheck, holidays and vacations, in either case. The truth is that only one of every three offers made to a lender will actually end in closing and Buyers should expect to wait weeks to learn if their offer was accepted.
In addition to the hassles of dealing with the “could care less” personnel at the lending institutions, getting these homes inspected is also a challenge. In many cases, entry before the sale is not even possible. No effort has been made to clean the homes or remove the abandoned trash. The utilities have long been disconnected. And, all lenders have a “as is” clause in the sales contract, which states that the lender is not responsible for the condition or repair of these homes, even if they are obvious and necessary.
Another problem with buying foreclosures is that the owner who lost the home long stopped caring about the property, and in some cases, even retaliated in anger.
- Always assume if something broke or stopped working, the owner didn’t spend money to fix it.
- Some angry people actually retaliate by attempting to destroy the house. They smash holes in walls and ceilings, plug the drains and turn on the water to flood the home, rip through the sheet rock to steal copper and wiring to sell as scrap.
- They steal the appliances, light fixtures, kitchen cabinets and HVAC units to resell.
- They leave anything and everything behind that they do not want. In many cases, this even includes helpless animals which are discovered locked inside the abandoned homes.
Buying foreclosures is not for the faint hearted and it is a myth that bank-owned properties are a bargain. In truth, REO’s are a messy hassle and the cost of repairs often exceeds the value of the home, after the repairs are done.
I don’t care what commercial you watched or which seminar you attended, if you they haven’t told you this information, they did not prepare you for the reality of the purchasing a home lost to foreclosure.
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