Foreclosures and Short Sales

More and more people are discovering that foreclosures and short sales can be a bit of a headache.

Buyers get excited about finding their dream home for “pennies on the dollar” until they realize that rarely happens. Agents are often frustrated by them because of the time they take. And sellers dislike them because of the impact on their own home's value.

But there is an upside, with many success stories to prove it. Being in the right place at the right time can really pay off, especially if you find what you're after. But chances are, if you've tried unsuccessfully to buy a distressed property in the past, you’ve had a few headaches yourself.

It's all about the price.

The main reason most people undergo the extra work, risk and headaches of purchasing a distressed property is because of the price. If it’s not a great deal, why bother? After all, you’re giving up some peace of mind, so there has to be a reward. But price is only one factor in choosing where to live. How much are you willing to compromise your lifestyle for the sake of a "great deal"?

There is a measure of risk involved.

There are hidden costs and uncertainties associated with foreclosures and short sales. If you are trying to buy a foreclosure on the courthouse steps, you have to do your homework. Are there tax liens, mechanics liens or other encumbrances on the property? Are you getting marketable title? Only with a bank-owned REO property can you be sure of avoiding those unpleasant surprises, but you will pay more for that comfort. The banks are mandated to sell their foreclosed properties for the most the market will bear.

Short sales are anything but short.

If you've ever tried to buy a short sale property, you understand that the process can easily take 6 months or more. That's a long time to put your life on hold while you wait to hear if the bank likes your offer. And more often than not, they don't. For the banks, it's all about the math. They have formulas that guide them on the prices they will accept. On a conventional mortgage, it is typically 85% of market value. FHA's start out even higher. That's why the overwhelming number of attempted short sales never work out - the buyer has no idea about the process, and neither does his agent. Most offers fail before they even start.

Someone else's headache.

Short sales and foreclosures don't come with any guarantees. They are all sold "Where Is, As Is". In other words, buyer beware. The bank will make you sign documents acknowledging that they have no prior knowledge about the house - no seller's disclosure, no termite information, no history at all. After all, they didn't live there and the people who did are long gone.

Did the roof leak? Are there cracks in the foundation, covered up by carpet? Was there mold in the basement? These are good questions, and they can sometimes be answered in a home inspection. But not always. And if a serious issue is discovered after closing, well, that is now your headache.

The smart money is buying developed lots and building.

Right now in Milton and Alpharetta, some of the very best opportunities are found in new construction. If your dream is to build a home for your lifestyle, backed up by the reputation and warranty of a trusted builder, with no hidden costs or surprises, your timing is perfect.