We Tell it Like It Is

So, if you are ok with doing some cosmetic work on a house, don't be so quick to pass on foreclosed properties. There are SO MANY out there right now and many of them are not the absolute garbage houses that people think they might be. Homes that have been foreclosed on are a lot easier to purchase than short sale/pre-foreclosures because the bank now owns them and that simplifies the process. We showed a buyer 2 foreclosures today in a very nice area of Brooklyn Park where homes would normally sell for $250k+ and with a little bit of new paint and a scrub brush, you have yourself an 8 yr old home for $195k or less.

THIS PARAGRAPH IS IMPORTANT. When banks foreclose and take over a property, they have a market analysis done to figure out what a home like that would sell for in today's market. Then, they figure in the fact that the home is probably not in the greatest condition and they are expecting a buyer to purchase the home as-is without knowing the history of it. So, they price the home UNDER market value based on those considerations. When buyers see a foreclosed home priced at $195,000, they don't realize that the listing price is a deal in itself. Therefore, contrary to popular belief, most buyers will probably not be able to get a home for $150,000 when its listed at $195,000. The bank already knows they priced it right and they are not about to accept an offer of $150,000 when they have already reduced the price considerably from its original value.

I will be closing soon w/a buyer on a really neat home that is a bank-owned foreclosure. Its in a very cute, well-maintained neighborhood where homes sell anywhere from $230,000 and up. It was listed at $188,000 with a newer furnance, roof, electrical and plumbing. My buyer plans on repainting each room and doing some minor remodeling the kitchen...and possibly refinishing the hardwood floors and replacing carpet. Since we haven't closed on it yet, I can't disclose what price she got the home for, but it was under the asking price and we were both elated that she got a little unexpected better deal. But, we both knew even $188k was an awesome price. Every improvement she makes on the home will increase the value little by little.

The key is to find the worst house in the best neighborhood when it comes to foreclosures and you will be sitting well in a few yrs!