Friday, June 20, 2008

Pros and cons of buying foreclosures

The lure of buying a foreclosure property can be very strong. It is one avenue for getting a good price on a property. I always like to caution the casual buyer, however, because the potential pitfalls are significant. Daily Real Estate News has this to say:

"Here are some prime considerations for anyone wading into the foreclosure market.

Avoid outstanding liens. Make sure the property has a clean title. Any outstanding liens and fees incurred by the original owner will be transferred to the new buyer.

Bid conservatively. The market in many places is still depreciating. That unknown added to transaction, repair, and marketing costs could sour the deal.

Beware foreclosure concentration. Prices in neighborhoods where there are lots of foreclosures have declined the most – and prices in these areas are still declining. A buyer should confirm that there’s an opportunity to make money if prices fall another 15 percent.

Beware the appraisal. If the price is discounted from an appraisal done before August 2007, it is almost certainly unrealistically high.

Cash is king. Even a buyer with a renter lined up and enough money for a 20 percent down payment needs still more cash to weather another two or three years of a depressed market before unloading the property."

If you still want to consider purchasing foreclosure property, you can get information about them on my website: www.AliceKuder.pnwRealty.com Click on "Search for Properties" on my homepage, then click on the "Foreclosures" tab at the top of that page.

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