Over the past few years, “Foreclosure” has become the new “F” word. Devastating neighborhood values and negatively impacting families across the country, foreclosures became the next “big thing” for many folks, being touted on late night television as the next “get rich quick” scheme. A fast and cheap way to achieve the American Dream.
The thing is, foreclosures are not “houses on sale” or discounted homes. Sure, the price may at first seem like a bargain, BUT my experience with ALEXANDRIA VA foreclosures is that these properties are generally priced at market value LESS an adjustment for condition. And, the bank does demand you give up some of the protections you would ordinarily have in a regular sale.
Now, if you are handy with a hammer and can do some repair work yourself, then, yes, a “needs TLC”fixer upper foreclosure may give you a terrific opportunity to build some sweat equity.
But, if home repairs are not your thing and you are going to have to rely on a contractor to get that foreclosure into a livable condition, then by the time you add up all the repair costs, you may be looking at a price tag that is the same, if not more, than that of a “regular” sale. Don’t automatically bypass a move-in ready house for a foreclosure simply because of the lure of a “great deal.”
Along that same line, don’t forget any money you put into the house for repairs or improvements is most likely after-tax out of pocket money. Instead of leveraging OPM – other’s people money – in the form of a mortgage which is partially tax deductible, you are spending your own money on which you have paid taxes and for which you will not be getting a tax break.
So, while a foreclosure may work well for you and turn out to be your dream home – and they’re not all in poor shape, of course – don’t automatically assume you’re getting a bargain; sometimes there is a move-in ready property right around the corner just waiting for you. It just makes sense to check out all of your options before moving ahead with a distress sale.
Interested in foreclosure properties? Click here to see all Alexandria Foreclosures.