Foreclosure... Deal or No Deal?
Written on Dec 11, 2007 by Charles Kim
Let me begin by stating that there are many exceptions to the “rule” when it comes to real estate like any other industry. Certainly the temptation to search high and low for that “killer deal” is in the back of every prospective home buyers mind. Sellers (banks) of foreclosed property are like any other sellers. They want to get the most money they can for the property, but the biggest difference is that bank owned property need to sell whereas a typical home owner can choose not to sell in most cases and wait it out for a stronger seller’s market.
Faced with this need to sell, banks have to keep pushing prices lower until a buyer emerges. In an area where there are many foreclosed properties on the market, this can put enormous downward pressure on prices. While the sale prices will represent the fair market value at the time and under duress, they may well represent only a temporary market price reduction. However, in a market such as Seattle where we have not seen the same extreme rate of short sales and foreclosure sales, the deals may not be as good as you might think.
Conclusions: Don't be fooled to think you are buying below the current market if you purchase a foreclosed property. You have to do your homework and have your agent work up some comparables for the area. Then all you can do is hope that the market turns and your decision to purchase your property was the right call. Real estate ownership is a marathon and not a sprint, so be patient, buy informatively and never over extend your financial boundaries.
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