Foreclosure Homes In Poor Condition Can Be The Best Deal

Homes in less than live in ready condition can be the best bet in buying a home. This small but very important fact is a mystery to most people. This mystery is a benefit to the home buyer that understands the difference. This can also be a benefit to the real estate agent that understands how to navigate the process of buying a home that may need some repairs. This may seem counter intuitive to the average person but when it is explained it makes all the sense in the world. We have to put ourselves in the shoes of the agency, bank or lending institution that holds the property in their inventory.

Housing and Urban  development, Fannie and Freddie Mac and others have a need to sell their homes in order to get the homes off of their books. The average foreclosure costs the bank that owns it $75 every day. These troubled assets are absolutely a cost and not a revenue generator. No one makes money on foreclosures except for the lawyers. The banks don’t want to own the houses and they need to liquidate the homes as soon as possible to avoid the increasing fees to maintain the properties. The maintenance is not what  might be expected. Maintenance is normally limited to safety and security issues. Normal upkeep is not part of upkeep therefore a home that was in good condition when it was originally foreclosed or vacated can become foul and fall into disrepair quickly. This is an opportunity that is overlooked by most home buyers and can be taken advantage of by more savvy home buyers.

The reason the opportunity is overlooked by most people is because they see only what is there and not what can be there. They also mistakenly believe that the cost of repairs are going to be a cash expense to them. The cost of repairs more often than not can be borne by the seller or the bank, HUD or the lending institution. Using HUD as the example there are a couple of FHA loans that are available to buyers of their foreclosures. The loan programs with HUD are called 203B and 203K and are used in different ways for different reasons. The one thing they have in common is that they both allow the buyer to roll repair costs into the mortgage.

Banks and lending institutions also provide repair costs to be rolled into a repair escrow.

The big take away is that repairs do not have to come out-of-pocket and there are options that should be explored.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s