Buying a foreclosure home can potentially give you a discounted price, but at what cost?
Foreclosure homes are usually in disrepair, but not always, sometimes there are flippers, contractors, etc... that end up in foreclosure on there either mostly finished or fully finished project. Then a buyer can get a potentially fully renovated home
at a discounted price. These are all possible scenarios, there are no set rules as to what type of foreclosure properties there will be in the market. Most of the homes will be in disrepair, either damage done on purpose by a disgruntled owner or tenant.
Or damage just because of years of neglect.
So you think it would be wise to purchase a foreclosure home to get yourself a sweet discounted price?
In NYC and Long Island, there has been an influx of investors, flippers, etc. looking to make a quick profit renovating and selling foreclosure homes. As a result of this, prices for foreclosure homes have gone way up over the years, almost to the point
that for many of these homes it doesn't even make sense for an investor to purchase, because the price is just too close to retail that they could potentially just end up breaking even or worse loosing money. These homes would only work for an end user
in other words a person who would buy the home to live in themselves. Figure that after purchase and probably a relatively big job of repairs, you might just come in at a price that is slightly below other regular sale homes in the area. The one positive
could be that you are able to take a home that is in a location you like, and has good bones, and renovate it to your liking, and possibly ended up a little bit under retail price.
Is it worth it? Entirely up to you!
Also keep in mind, a large majority of foreclosure homes are in such disrepair that the bank will only allow a Cash Sale, no mortgage can be taken out on the home, except for Hard Money Loan.
OK, there is also the possibility that if you can only buy cash or you can mortgage the home, but you don't have the money for repairs yourself: You could deal with a bank who can mortgage the home with a loan product called the 203k. This loan product
will give you money for repairs, there are many factors that go into this type of loan, you would need to speak with a Banker to get further details for your particular situation.
Opinion Article-Joseph Perez, always verify information for yourself.
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