Thursday, July 30, 2015

Should a First Time Home Buyer Purchase a Foreclosure Home?

Over the years I have come to believe many first time home buyers see the easiest route to home ownership through the foreclosure market.

"But you can do better!"

That is what I tell prospective first time home buyers who contact me about buying a foreclosure home in Brevard County, Florida.

I understand the appeal of foreclosed properties - price.

However, in my opinion, there are a couple of flaws in taking this approach.

First, potential financing issues.  Foreclosures, as well as some short sales, are usually priced low for a reason - deferred maintenance.  Some of these properties have been vacant for a long time.  Some may have been vandalized.  Some, although newer construction, may have been stripped of the appliances, cabinets, sinks, ac units. Some may have problems with a leaking roof.  Thus the discounted price

If a buyer is getting a mortgage there will be an appraisal.   Mortgage lenders want to know the value of a home being financed is equal to or greater than the financed amount as well as being in a condition that supports that value. There are some conditions which can prevent financing (especially VA or FHA) like  AC missing/non functioning, leaking roof, water intrusion, older electrical (aluminum wiring, etc.), plumbing problems and other conditions.   

Secondly, available on-hand cash.   In a foreclosure, even if the bones are good, bring a suitcase full of cash.   What condition would you be in if your doctor said "bones are good?"  

Not all buyers (including most repeat buyers) are suitable prospects for foreclosures or short sale purchases.    Buyers should discuss needs with their real estate professional to determine if one a distressed property is a consideration.  Consider things like goals, how long you plan on living in the home, prospects for a job change that requires relocation, changes to your family (children, a marriage), etc.   This is why it is critical to have a local, knowledgeable, experienced real estate agent working for you.  Remember, your own buyer's agent will not cost you anything.

What is a better alternative for a first time home buyer in Brevard County, Florida than a foreclosure (or any other place)?   

A fair market sale that is in move in ready condition is a better choice even if it is an older home.  "Move in" condition does not necessarily mean nothing must be done to the property but rather no condition issues are present to prevent financing or that requires immediate work.

If you are ready to buy a home in Viera or Melbourne, Florida,c all me at 321-693-3850 or send me an email.  Ask for a referral to a local lender - especially one that can help first time buyers.