Foreclosed Homes

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Would anyone here buy a home that was foreclosed? I know they are cheaper and everything, but I think I'd feel kinda bad about it. At the same time, though, it can be a great deal.

*(btw I am in no way considering buying any property at this point and not for many years. This is a theoretical question prompted by the foreclosed homes ads I've been seeing on tv)

[old_school_soul]

It's totally worth it.

[old_school_soul]

Forclosed does not always mean it's a damaged house. A lot of times it's because people can't pay their mortgage. I think the OP feels bad about the karmic situation I suppose.

[wordsmith]

Forclosed does not always mean it's a damaged house. A lot of times it's because people can't pay their mortgage. I think the OP feels bad about the karmic situation I suppose.

This is my thought. Most foreclosures are due to people in financial straits, it doesn't mean a place is a crackhouse.

I also assumed that she was talking about feeling badly that you're able to benefit from somebody else's misfortune. Kind of like the feeling I get in pawnshops.

[PeakDream]

Be very careful with foreclosed homes, I worked for my dad who manages rental property part time. Here is my experience:
1. Foreclosed homes in good areas. Usually, you won't save any significant money because everyone especially those who do this for a living will be there to bid. Also, make sure you have lawyers and inspectors to comb through the building and paperwork to make sure the house doesn't have back tax, water bills, and structurally sound, etc..
2. Foreclosed homes in decent areas. Again, similar to the above but less competition from the professionals.
3. Foreclosed homes in bad areas. Don't even bother, unless you have a lot of energy to comb those properties, they are generally in bad shape needing repair, owe back tax, etc..
Please note, this is generalization. It might not be the same in your areas. Good luck.

[Winter Storm]

My sister had bought a foreclosed home, I think the previous owners couldn't keep up with payments or something because they'd pretty much abandoned it. She bought it for $110k. By the time she finished renovating it, it was worth $180k and was really nice and roomy.

[Winter Storm]

Also the house I grew up in was eventually foreclosed. There was absolutely nothing wrong with the house except payments weren't being made.

[cheshrcarol]

Doesn't it help the people when their home is sold though? I think they owe a lot of money to the bank when that happens and the money from the sale defrays that. I think.

[wordsmith]

Still, that doesn't decrease the suckiness of somebody else living in "your" home. Especially if it was a family home, or some such.

[analogman]

Some people will destroy the house before the bank takes possession. Since buyers usually don't get to inspect the house ahead of time when buying a foreclosed house, that is a risk. By the time the home goes into foreclosure, the people will owe so much money to the bank it makes little difference whether the house fetches a good price or not. There are also people who might resent the new owners living in "their" house and that can cause trouble.

I personally would not buy a foreclosed house unless it was an absolute bargain (say more 30% below market) because of the risks. I have heard that it might be better to look at people who are about to be foreclosed on and buy the house from them directly. This involves a lot of work though.

[cheshrcarol]

Still, that doesn't decrease the suckiness of somebody else living in "your" home. Especially if it was a family home, or some such.
I wasn't saying being foreclosed on doesn't suck, I just don't see it as a bad karma thing to buy a foreclosed house. You as the buyer aren't doing anything to the homeowner, it's really the bank. And by having the house bought, I think it helps the homeowner somewhat.

[wordsmith]

I wasn't saying being foreclosed on doesn't suck, I just don't see it as a bad karma thing to buy a foreclosed house. You as the buyer aren't doing anything to the homeowner, it's really the bank. And by having the house bought, I think it helps the homeowner somewhat.

I'm just saying that I think that's why the feeling badly...empathy for the emotions involved in the loss.

[tina1979]

My parents bought a foreclosed house where the previous occupants tried to destroy parts of the house.

It wasn't too big of a deal to fix and my parents very much try to get my sister and I to look at them when the time comes. They think it is worth the investment.

[and1grad]

Some people will destroy the house before the bank takes possession. Since buyers usually don't get to inspect the house ahead of time when buying a foreclosed house, that is a risk. By the time the home goes into foreclosure, the people will owe so much money to the bank it makes little difference whether the house fetches a good price or not. There are also people who might resent the new owners living in "their" house and that can cause trouble.
Totally agree. I dont see myself ever buying a foreclosed home. Too much risk.

[AG_47]

Three years ago my parents bought a house that had been foreclosed. The previous owner's wife had left him and he just stopped making payments. There was still some furniture in the house and even family pictures still hanging on the wall. Their wedding picture was broken and shoved in the back of the bedroom closet. Beer cans covered the floor and mice would crawl over your feet. After my parents bought the house, the guy showed up a month later and wanted the furniture back. We wouldn't let him have it because it was included in the sale of the house so it wasn't his anymore. I think my parents paid $20,000 for it and they sold it a year later for $50,000. I know that they needed to do some renovations but I don't know how much it cost. My dad had just got a job in the area and didn't have a place to stay until they could move down there so the bank let him stay in the house three months before they bought it, so they knew what was wrong with the house before buying it. It was risky because they started renovations before the sale went through. If something happened and they couldn't get the house, then they would've been out of the money they had just spent to renovate.

[sparky88]

There are a ton of foreclosed homes in Cleveland OH (nice homes in the suburbs) because lots of people have lost their jobs. In fact, my parents will probably be losing their house this summer if things don't change. There are 2 other houses on our street that have been on the market 1-2 yrs each so we can't see our home selling quickly. My parents have kept up with all the home maintenance and the house is in great condition.

Also, a close family member bought a house in a suburb of cleveland 7 years ago (foreclosed due to a divorce/money issues) for 350,000. He just sold it for 790,000. Pretty good investment. That home was also in great condition.

I plan on buying a foreclosed home when the time comes.

[MNGhost]

The deal with foreclosed homes is that they are usually sold "as is". You aren't going to have any room for negotiating to have the house fixed up before taking possesion, like you could buying from a regular seller. Foreclosed homes are typically owned by a bank or lending institution who are just trying to cut their losses. They aren't interested in dinking around with buyer demands (selling homes is not their business).

The other thing to remember is that if the previous owner wasn't able make their mortgage payments, they probably didn't have a lot of money to put into maintence either (and they certainly weren't fixed up prior to going on the market), so generally they aren't going to be in as good condition. The asking price may seem like a good deal, but you have to consider how much time and money you are going to have to put in to get the house up to a condition you are comfortable, or if fixing up a home is something you want to do at all.

I remember when I was house shopping I did look through one or two foreclosed homes. It was a little cheaper than comparable homes in the area, but would have taken a fair amount of work to bring into good condition. When I estimated how much time and money I would have to put in just to bring it up to par with other homes I had looked at, I realized it really wasn't a very good deal at all. And I really wasn't interested in fixing anything up anyway.

As for the karmic consequences, that's something you need to decide for yourself. But remember that you don't know the reasons for the foreclosure and it could just as easily be through bad judgement or irresponsibilty on the part of the previous owner (lots of people foolishly bought homes they couldn't afford in the recent housing boom) as misfortune.

[dacrunkest]

Sometimes it is the fault of the owner, other times it is a bit more grey area...during the housing boom mortgage lenders were approving anyone with a pulse. Some of that lending was done in predatory fashion (bankers knew that people would not be able to make the payments once interests rates rose), but they lended anyone. I have a great friend who left the mortgage lending business because he was not rewarded by telling people "you are not in the financial state to own a home right now, it may look like it on paper, but you really need to have X (income, ect.) to ensure that you will keep it when times get bad". Instead, it was all about working the numbers to make sure the person gets that loan. Interest only loans? Lending to people with questionable DTIs? Come on, there has to be a little more responsibility and restraint in the lending industry.

I would not buy a home out of forclosure.