Q.
Is there any advantage to only looking at (and buying) a foreclosed home?
A.
You can get a pretty good bargain on some points, but don’t ever think you’re going to buy a house for a ridiculously low price. The bank is still involved in the foreclosure process in court, and they have a certain dollar that they’re owed.
Say the bank has a house in foreclosure and there’s $100K still left on the mortgage. Even though there’s more inventory, a bank will still likely bid up the price to the amount of the mortgage to recoup their losses.
Unfortunately, there is a big problem with buying foreclosed properties. You can’t get inside the house, so you have no way of knowing what’s going on inside. You could love the outside, but once you buy the house and finally get inside, you could find that the previous owner ripped out all the piping to sell the copper inside because he or she was angry at the bank. Suddenly, you don’t just have a $125K house; you have a $125K project.
Nestpert Jeff D. Opdyke, author of Financially Ever After: The Couples’ Guide to Managing Money
-- The Nest Editors
Jul 09, 2009
See More: Buying a Home