So, I receive so many inquiries from old and new clients looking to purchase a foreclosure because they want a good deal and they feel with all the foreclosures right now available, that is the best possible deal to be had. Well, I am here to tell you that while that aspect is one part of the market, it is not the whole marketplace. Let me take a moment of your time to speak about these things generically.
Take this example from a logical perspective, you are living in a house that for one reason or another you can no longer afford. Maybe you have tried to work with your bank to keep your house and make partial payments or modified lowered payments, and the bank isn't willing to work with you, the homeowner. These people are not happy campers! What does that mean? Well, I have seen the entire spectrum. They pack up and move out and leave the house in good shape. If that is the case, the bank, like every other seller, will still want market value for the house, so the buyer will still find it difficult to get "that great deal". If the owner goes the opposite direction, performing/allowing damages to the house such as: they can cut out the plumbing, pull out the electric wires, spray paint walls, rip out the HVAC, or simply just turn on the water, let it run and walk out the door, yeah, it is possible you can get a good deal on those types of houses. It certainly entails lots of planning (which I am well capable of consulting with you) however, that planning could include the following: lots of mold work, lots of plumbing, electric, and of course cosmetic work. You might get lucky to find that "diamond in the rough".
However, now think outside the box. You can get a great deal on houses that are distressed or owned by people that don't want to own them. Let's review some options:
1. Short Sales: This is when you have an owner who cannot afford to pay their mortgage, but doesn't want to ruin their credit. They will chose a short sale option. It might take a little longer for you to physically own the property, but can certainly be worth the wait. You might still have some work to do to the house, but it usually is only cosmetic and minor repairs due to the fact that it is typical that the owners are still living in the property.
2. Estate Sales: The personal representative working to sell a house belonging to a deceased relative usually wants to get it done quickly. They usually don't want to try to fix up the house or get top dollar. Most of the time, this is dumped on a lap of someone with an already busy schedule and this becomes more of a hassle. These homes usually need updates, but again, you usually will be dealing with a home with heat and plumbing and mold-free. Older individuals usually take care of the important and expensive items of a house, so usually the roof will be in good condition, maybe newer windows or furnace.
3. Relocation Homes: Most people are not aware of these homes, have no idea what they are and therefore sometimes steer clear due to ignorance. I think these can be the absolute best way to purchase a home for less than market value. These homes are probably a little higher in the price range, so may not work for the first time buyer, but can be phenomenal immediate equity in your pocket. Let me explain. A seller gets offered a promotion but has to move to another state. To entice the seller further, their company hires a relocation company which agrees to purchase the seller's house and pay for the move. The relo company will do at least two appraisals before hand to establish value and the price they would be willing to pay. The seller then tries to sell his house before selling to relo, because the relo company will pay a bonus to the seller for selling it themselves. If the seller doesn't find a buyer and sells to the relocation company, then the relo company has inventory they really don't want. In those cases, you can typically get a really good deal on the home. Usually these homes will need little to no work, just instant equity.
There are many different ways to get a good deal in real estate. Experience matters so consult with a Realtor which has experience and don't fall into traps or Money Pits!