Ask MP: Buying a Foreclosed Home
Q. We really need more space, and we live in an area that's had a lot of foreclosures. I don't mean to be a vulture, but is that a good way to trade up?
It's one way to find a deal. A good way? I vote no. But your stomach for paperwork, bureaucracy, and possible legal entanglements might be stronger than mine. Yes, prices of foreclosed homes tend to be lower than market prices -- but not always. And in most cases, it's up to you to ferret out any potential problems, from property damage to hidden tax liens. Other hurdles: You may only be allowed to tour the outside of the house, and you may not be able to get traditional financing.
Not that I'm trying to discourage you or anything.
But here's how it works: You can buy in a presale, before the lender forecloses (this allows you to inspect the home); you can buy at auction (which requires you to pay cash); or you can buy directly from a bank. It's probably best to use a real estate agent who specializes in foreclosures. (Check out Foreclosurepoint.com.)
My bottom line: Save your time and energy and consider making a below -- asking-price offer on a traditional home for sale instead. Good luck!
Send MP Dunleavey your money questions at Parenting.com/momsquad.