The foreclosure market at this level is a relatively new phenomenon. I have sold real estate in Metro Atlanta for over six years and in my first four years, I never sold one foreclosure. I didn’t even know of anyone whose home was lost to foreclosure. And then the chickens came home to roost, so to speak, and homeowners began to go under. Now the term “short sale”, pre-foreclosure and foreclosure are a regular part of our vocabulary.
In a couple of years we have moved from a “seller’s” market to a “buyers’ market” which means that we have more homes to sell than we have buyers to purchase them. Buyers are being told by the media that they are in the drivers’ seat in the homebuying process and the sky is the limit. I have seen stories about sellers offering cars, vacations, plasma televisions, etc. just to get their home sold. I have also read where sellers are finishing basements, upgrading appliances, painting and re-carpeting also as a means of getting the home sold. While these stories might be true in the competitive world of traditional resale or antsy new construction, here is the reality in the Metro Atlanta foreclosure market.
Banks sell their foreclosures “AS IS”. No matter how many times I tell this to a potential buyer, I will still have someone ask if the bank will replace the carpet or paint the master bedroom. Usually the answer is “no”. Here is the reason. Banks have already lost a great deal of money on every foreclosure stemming from lost mortgage payments, attorneys fees, utilities, household maintenance and the general drop in value due to the economy. Every bank asset manager is asked to manage their bottom line and recoup as much as possible on the sale of the home. For this reason, bank managers are reluctant to make repairs, do cosmetic upgrades or replace appliances in the home. It is much simpler to set a marketable “as is” price and sell the home. What buyers have to understand is that the banks have already taken the homes’ condition into consideration when setting the list price.
So if you are a buyer looking for a foreclosure in the Metro Atlanta area, consider the following:
- If the carpet is dirty and in need of repair … AS IS
- If the walls desperately need painting … AS IS
- If there is no stove, refrigerator or dishwasher … AS IS
- If there are no light fixtures … AS IS
- If the kitchen center island is missing … AS IS
- And the list goes on ….
There are times when the bank does some basic maintenance to the home prior to listing it with a Realtor. This move only makes good sense because a “move in ready” home attracts more buyers and top dollar. Also, a bank may be prepared to do some minor repairs when the lender requires them prior to closing on the loan. Usually buyers applying for FHA financing will find that their lender is more strict on the condition of the home because FHA requires that the home is “livable”.
There is much to consider when purchasing a home. One big consideration is that when it comes to purchasing a foreclosure – the home is sold AS IS. Whether you purchase one foreclosure over another …. well, that depends on what “is” really is.