Foreclosure. In the new homes market, it’s the "F" word. The number of foreclosure filings in the U.S. rose by 81 percent in 2008 and by a whopping 225 percent from 2006. The housing market is flooded with the tsunami of perceived bargains. The key word here is "perceived.” There are several reasons that the "buyer beware" rule should be in effect when considering a foreclosed property:
1. Poor maintenance. If the owner wasn’t paying the mortgage, what makes you think he/she was investing in even the most basic upkeep?
2. As is. The "As Is" caveat could be costly for the buyer. A new home and its contents have warranties that protect the buyer. When buying a foreclosure, you get exactly what you pay for.
3. The angry owner. In the wake of a foreclosure, many former owners feel victimized by their situation. There are countless tales of homes being stripped of appliances, lighting fixtures, and even plumbing, all of which are removed in haste, and with no concern for the incoming dweller.
4. Hidden cost-cutters. If the foreclosed property is a new home, the builder was likely cutting many corners to avoid mounting more debt. What’s hidden under the drywall? "New" doesn’t necessarily mean a home is in excellent condition; it could mean that no one has yet discovered the creeping shortcuts.
5. Wasted time. Purchasing a foreclosure requires a mountain of paperwork and it can take months before you discover whether the bank accepts the deal. And what happens if your offer fails to make the cut? You begin the lengthy process again.
When your prospective buyer tosses down the "F" word like a gauntlet, pick it up and present the reasons why the foreclosed property is a questionable investment, at best. Then bestow upon them the many reasons that the new home you’re selling will deliver long-term value, satisfaction, comfort, and peace of mind.