The Pros and Cons of Purchasing Raleigh Foreclosures

Many people call me to discuss the possibility of purchasing a foreclosed home in Raleigh. They have heard that there are tons of homes in the area that have been foreclosed on and they can get a great deal. While this is sometimes true, it is not a guarantee.

During my 9 years of selling real estate, I have sold several foreclosed homes. Some of these were in terrible condition, others were pristine. There is no set rule for what to expect while searching for foreclosures! More times that not, bank-owned properties (or foreclosures) are “as-is” sales. This means the bank will perform no repairs on the home. You do, however, have a set amount of time after the bank accepts your offer to conduct your own home inspection. If there are items that are beyond your scope of comfortability, you may receive any Earnest Money you may have already given the bank back and walk away from the deal. You will not be reimbursed for the cost of the home inspection. There are some incidents where the bank will agree to do repairs they deem to be necessary but this is the exception, not the rule.

There is also no guarantee that you will get a steal of a deal! Many times the foreclosed home are close to the same price as other non-foreclosed homes or after completing the amount of work that is needed on the home, you now have paid current market value. The pricing depends on which bank that owns the home, the amount of foreclosed inventory they currently are holding and the amount of public interest in the home. I have had clients pay full price for a foreclosed home because there were other parties interested. In this example, the home was about 15k under market value but it needed at least that in both mechanical and cosmetic repairs.

Another thing to consider is the location you want to live. You will notice certain areas tend to have an abundance of foreclosures, while others have very few. When an area has several foreclosures, that trend starts to become the norm. Meaning, these lower prices start turning the entire neighborhood prices downward. This can be a slippery slope. So while it seems like you got a great deal on a foreclosed home, it is really the new market price for that area due to the heavy load of foreclosures. While on the other hand, buying a foreclosure in an area or neighborhood that has very few can prove to be a better investment since that is not the norm for that area or neighborhood.

If you need help navigating Raleigh’s real estate market, please call (919) 414-9738 or use my contact form. Depending on your needs, time frame and budget, we can decide if a foreclosure is a good fit for you!

June 12th, 2012 by Amy Tortorella

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