Daily Real Estate News | June 19, 2008
**Avoid Pitfalls When Buying Foreclosures **
Buying a foreclosed home is no cakewalk. It can be a sure-fire way to lose money for a purchaser who isn’t knowledgeable and careful.
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.
Source: Forbes, Matt Woolsey (08/19/08)
