? Home Buyers Guide ? Bank Foreclosures / Short Sales: Bargains or Moneypits?
Every Dearborn MI area home and real estate?buyer looking to purchase in today?s real estate?market will need to decide if they would consider buying a bank foreclosed home, or a home that is being sold as a short sale.?Both of those options can have advantages and disadvantages. For many home buyers, the disadvantages greatly outweigh any advantages and they end up purchasing a home offered as a traditional sale.
In addition, you need to keep in mind that bank owned properties (foreclosed homes) and short sales are not the only good deals out there. In fact, when all is said and done, sometimes the bank owned homes will cost you more than a buying a home that is already in move-in condition.
Bank Owned Homes / REO / Foreclosures / Foreclosed Homes
These are homes that someone purchased, defaulted on the mortgage meaning they didn?t make their payments and now a bank owns the property.
Advantage: Price may be less than other homes in the area
Disadvantages: Might become a ?money pit? due to the following?
- No utilities on: Foreclosed homes usually do not have gas, electric, and/or water services on ? sometimes this has lead to dangerous mold growth. You may be required to turn the utilities on and put them in your name before you close on a bank owned / foreclosed home.
- Stripped out: You?ll often find that these homes do not have a furnace, central air unit, plumbing, fixtures, ductwork, kitchen cabinets, electric service, toilets, hot water heater, siding, etc. have often been stripped from the house
- Poor condition: Many foreclosures are extremely dirty, have holes in walls / trash strewn about, broken/missing windows and doors
Water damage due to leaks, water left running, sump pumps not operational - Other damage: Structural issues and/or other damage to property due to neglect and exposure to elements
The old adage of you get what you pay for is most often true with bank owned homes / foreclosures. Those that need a great deal of work are priced low but at what cost to you in the end? If you purchase the property for $30,000 below market value but have to put that much into the property what have you gained? Nothing!
All bank owned properties / foreclosures are sold ?AS IS? so if they are in a community that requires a city inspection, YOU will have to do repairs required by the city BEFORE you can move in. Unless you have substantial cash reserves and deep pockets this could end up causing a financial crisis for you.
Homes being sold as a ?Short Sale? (aka short sales)
Short sales are completely different than foreclosed homes. In this case the owner is ?hoping? that their lender(s) will take less than what than what is owed on the mortgage(s). Keep in mind that just because this home is being offered for sale, you as a buyer do NOT have any guarantee what-so-ever that the owner?s bank will actually take less than what is owed. The owner is simply seeking to obtain offers on their property in an effort to supply them to their lender along with hardship papers and then they ?hope? the bank will actually approve the short sale and allow the property to be sold to one of the buyers that submitted an offer.
Advantage: Price may be less than other homes in the area
Disadvantages: Many!
- Misleading original asking price: Short sales are often put on the market at a low price to create a bidding war. In those cases, be ready to put in an offer for over asking price or your offer won?t have a chance.
- Be prepared to wait?and wait! Homes sold on a short sale may take many months to close?IF you even close at all. A year of waiting would not be unheard of. So, get ready for a long wait and keep in mind, if your offer is selected, you will be locked in to the purchase for 2-4 months or more. Nobody will be give you an accurate estimate for your waiting period. If someone does give you a time estimate?they are only guessing.
- Many short sale homes NEVER close. The short sale process is very complicated. There are many, MANY variables that can throw a wrench in the works at any time. You could be waiting 6 or more months only to find out that the whole deal is off because the seller cannot get approved for the short sale.
Most Importantly?
Whatever route you feel is best for you, it is VERY IMPORTANT to be represented by an experienced, knowledgeable real estate professional like Steve Hatfield. Many agents simply aren?t as qualified as Steve and if you happen to end up with a real estate agent that really does not know his/her business that well?it can cost you in more ways than you could ever imagine!
If you are in the market to Buy a home or if you are planning to Sell a home or real estate in Dearborn MI, Dearborn Heights, Garden City, Westland, Redford, Livonia, Plymouth, Canton, Northville, Novi, Farmington, Allen Park, Taylor or any one of the other Detroit Michigan west side suburbs, Contact Steve Hatfield today.
Visit my web site at: www.DearbornHomes.com for complete and in-depth information about Buying or Selling a home or real estate in the Dearborn Michigan area or any one of the other Detroit Michigan west side suburbs.Visit www.DearbornHomes.com
Original article written by: Vicki MauleImage by: DigitalArt
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