Shopping for a Bargain in the Foreclosure Market?
Distressed properties account for a large part of today’s housing market; however, after some consideration, many buyers choose to keep looking rather than purchase a home in foreclosure on a national level. According to the National Association of Realtors® 2009 Profile of Home Buyers and Sellers, almost half of all buyers and 56 percent of first-time buyers considered purchasing a foreclosed home but ultimately did not.
The survey revealed several factors that went into buyers’ decisions not to move forward with a foreclosed property. Twenty-five percent of buyers couldn’t find the right home, 17 percent thought the home was in poor condition and 16 percent felt the process was too difficult. Ten percent of buyers ended up purchasing a foreclosed home, up four percentage points from last year.
Still even with these statistics, many home buyers are taking on the challenge of restoring a neglected foreclosure as opposed to buying one that is move in ready. In truth it depends on the mindset of the buyer themselves, and usually whether they have confidence and certainty on home restoration and repair. In the Battle Creek market, where I am a local Realtor, it is quite mixed.
There are those who look forward to the challenge of restoring a home, and can see the potential beyond its imperfections, and there are those that would rather have a home where the work is completed.
The common factor with a foreclosed home is that one is buying it essentially from a third party that has no knowledge
of the condition or any defects in the property. Inspections will reveal a great deal, but at the same time, there are sometimes things that can get by an inspector because they bear out in the course of living in the home over time. Weather conditions change, and may reveal defects in time that were not visible.
I had a case recently where a septic system was inspected by professionals and found to be in good working order, and in accordance with the County drawings. However, when the homeowners moved in, the septic backed up, and when the lines were excavated, it was discovered there were two septic systems and the new one had never been connected, and therefore the County drawings were wrong. This was a defect no one could have foreseen, and only revealed itself when the home was lived in.
So buying a foreclosure can be an adventure, and it is not for everyone. However, if you are looking to buy a home, whether a foreclosure or not, working with an experienced Realtor is the best place to start.