I am seeing such great deals lately that I'm actually considering selling my home. When we purchased our home we thought it was big enough. But after living in it we discovered we could have used a little more space.
We should not lose money on our home, although when figuring in the work we've done on it (remodeling bathrooms, putting in hardwood floors and some new windows), we'll be lucky to break even. But we don't care.
The math is in our favor. Even if we don't see good appreciation on our home (that we purchased in 2003 - just before prices started to skyrocket) we will more than make up for it with our next purchase. In fact, I've seen foreclosed properties that are larger than our home going for less money, just because it's a foreclosure.
Aren't short sale and foreclosure properties in bad condition?
Some distressed properties have been wiped out by their owners (who have sold everything down to the copper pipes). I'm seeing more of that in the city of Chicago, not so much in the suburbs.
Some of these properties are filthy with the remnants of the people that were forced to leave. In some cases, just the process of foreclosure has caused problems with a home such as pipes bursting and not being fixed, causing mold. But all of this can be cleaned and fixed, and in many cases it is well worth the effort.
I showed a foreclosed Orland Park condo for sale that was in great shape. It needed some new carpeting and a little updating which is purely cosmetic. But it was a steal and if my buyer wasn't interested, I would have put a bid on it.
You do have to be realistic about your offer
In every foreclosure offer I've been involved with, it has been a multiple offer situation and the listing brokerage came back to each bidder and asked for their best and final offer. I tell my clients what the property would be worth if it wasn't a short sale (and considering they would fix it up). We go over what similar properties have sold for and my client makes the decision on whether to increase their bid or stay put. Most increase their bid.
In one case, we could see that the original owners purchased a property for $314,000. It was on the market for $164,900! My buyer had already lost out on a short sale property and put in a good bid over asking price. They came back asking for our best and final offer. She went even higher. And she won the bid but still got a fantastic deal. She wouldn't have been able to afford to live in this town otherwise.
When looking at foreclosures and/or short sales, some buyers think they're going to get an even better deal than what is before them. They think they can bid under the list price and still have a chance. These prices are so deflated to begin with, unless the property is in such horrible shape that no one else will be interested, you can probably count on multiple offers coming in.
Many bid at asking price and still don't win because someone else realizes what a great deal it already is and bids over. And then there are those people who simply want to win. They get caught up in a bidding frenzy and want to make sure they get this property.
Of course, when going into a foreclosure purchase for investment purposes, you shouldn't be tied emotionally to the property so you pay too much. But a good agent will prevent that from happening.
Most of the distressed properties currently on the market are priced well below market value. Unfortunately, in some areas these properties are determining market value and are making it difficult for owners that are selling since values are plummeting because of these low priced, distressed sales.
Won't these foreclosures be gone soon?
The government is trying to make it easier for homeowners to modify their mortgages and try to prevent foreclosure, but for many it is too late. If a seller has lost their job they cannot qualify for a loan modification.
I've been told there will be another wave of foreclosures before things start to turn and that is why I'm thinking of going out there again and trying to find a home that fits us better. I love my current home and have thought of building on but unfortunately it's cheaper to buy something else.
My husband and I are not afraid to remodel and fix a home up. And if you can handle that then you could find a great deal for yourself. You need to work with an agent that can guide you and you have to be prepared to offer more than list price.
If you'd like to work with someone who has experience in short sales and foreclosures call Judy Orr at 708-536-8200 or fill out the Home Finder Form. You'll receive new listings straight to your e-mail without having to do any of your own searches. That way you won't miss the great deals when they come on the market.