Should You Buy a Foreclosure Property?

Pinellas County Real Estate Podcast with Sean McManamon

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A lot of my clients have been asking me about foreclosed homes. They seem to believe that buying a foreclosure can get them a great deal on a home. Today I just wanted to clear up some misconceptions about foreclosures and why you may want to think twice about buying them.

You need to know that a foreclosure is a bank-owned home, and that the bank has taken the title from the owner. The bank will then put the home for sale with a Realtor, and that is a foreclosure.

So, should you look at foreclosures? Yes. But will you get a great deal on them? Not exactly.

Statistics in Tampa Bay reveal that foreclosures often sell closer to their list price (or over it) than traditional homes do. This means you're better off just buying a resale home. The only time you might find a great deal is if there were multiple things wrong with the property, but most buyers are purchasing homes that they can move into and start living in.

When banks sell foreclosures, they perform their own appraisals and generally don't want to come down off the market value too much. Another thing to keep in mind is that you will be negotiating with a bank when you try to buy a foreclosure, and they're usually not willing to negotiate very much. Banks often don't offer warranties on the home, so you really have to do your research or you could end up with a broken home.

Bottom line is that foreclosures appear to have a great value, but in reality, you're probably better off buying a resale property unless you're looking to invest in a property to spruce up and sell later.

As always, if you have any questions about this subject or want to ask me about Tampa Bay real estate, please don't hesitate to contact me.