Profile picture for hawakane33

it is good to buy a forcloser house with a cheapest price and more sq footage than a new one with

less square footage
  • January 12 2014 - Memphis
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Answers (8)

If you buy a foreclosed home, you need to make sure the cost to repair the home plus the cost of the purchase is not more than the current value of the home in restored condition.  The upside of this is that many components of the home will be new with your choice of finishings.  The downside is that it involves work, estimating, hiring contractors, etc.  Keep in mind that the end costs of the project may likely be more than the original estimate because as you get involved in the project, quite often new required repairs pop up.
  • January 13 2014
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It could go either way. Sometimes, you can get a great deal on a foreclosure. Make sure you have an agent that will do research for you, as not all foreclosures are listed well below their market value. Alot of times, you will get a lot more square feet for your money and renovating your own home is a great way to build instant equity and customize your home. On the other hand, some foreclosures can be money pits. Make sure you opt to do an inspection. It may be $500, but that can save you alot of time and money in the end!
  • January 13 2014
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One loan program you could consider is a renovation loan.  If the property needs repair (major repair or even appliance upgrades) you can finance the repair work.  The appraisal is done taking the repairs or upgrades into account.
  • January 13 2014
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Oops!  I didn't check my reply before I posted it,,,, corrected version

The very first thing is: DO NOT ASSUME that a forclosure is a good deal.  No matter what the price and/or square footage.   If someone was foreclosed,  it means they did NOTpay the mortgage, if they didn't pay the mortgage, you can bet they did not  maintain ANYTHING
  • January 13 2014
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Profile picture for dean692
The answer is No.........and Yes.

Simply put, it will come down to what the condition of the property is in, and how much you will need to put in to the home to bring it up to a comparable that you consider "new".



  • January 12 2014
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The very first thing is: DO NOT ASSUME that a forclosure is a good deal.  No matter what the price and/or square footage.   If someone was foreclosed,  it means they did pay the mortgage, if they didn't pay the mortgage, you can bet they did not  maintain ANYTHING
  • January 12 2014
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This is a good question and something that a Realtor could be talking with you about to help you sort it out.

It depends on so many things.  For example:
1.)  Will you own the home for a longer period of time (5+ years)? 
2.)  Is your market one in which buyers (for resale) are sensitive to energy efficiencies?
3.)  Can you and are you willing to qualify for an FHA 203K Mortgage Loan (rehab loan) with higher Mortgage Insurance Premiums (MIP)? 
4.)  Do you actually need the larger home with more sq. ft.? 
5.)  What is your exit strategy (rent the home eventually, sell it eventually, or keep it forever)?
6.)  Do you have the time, money and focus to oversee the repair/updating of a foreclosed home?

I am a New Home Specialist and sell Re-Sale and Foreclosed Homes also.  My preference is New Homes as they are typically built better (better building codes), with better materials, better technology, better floor plans, more contemporary finishes, and have higher energy efficiencies and are in better areas with more amenities.

For these reasons, a New Home will typically appreciate more in the next 5 years than an older home, even if that home has been, or will be, updated.

Plus, with a new home you can order the finishes to suit your taste without the cost or hassle to update he home.  Additionally, you will have a New Home Warranty that will help you sleep at night.

A bigger home will cost more to maintain, clean and heat/cool.  If you don't need the extra space, perhaps it would be best to get the smaller home.  Sometimes less is actually more. Bigger is not always better.

If the size of the New Home is not far from what the average size of a home sold in your market, that is good.  Purchasing any home that is too far from the norm (either too large or small) may make re-selling or renting it more difficult in the future.

However, if you are getting a "smoking" deal on a Foreclosed home, and the price allows you to update the home (including any modifications and energy efficiency improvements), then maybe the Foreclosed home is the better deal.

Just be careful about over-improving a home in an older neighborhood.  It may take a very long time before the neighboring homes catch up with your home (if ever), leaving you with a costly investment for which you may not get a return on your investment in the short term, or ever.

Personally, I believe New is almost always better for most buyers, depending on your budget.  However, consider it carefully with the good advice of a local Realtor.  They can help you do a Competitive Market Analysis for a home the area in which you are considering a purchase.
  • January 12 2014
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That's up to you as a buyer and also the condition of the foreclosed home.

You have to consider some things such as:

-How much money you would need to invest in repairs/remodeling/updates, and what your investment would be at the end of the day.
- Are you buying it to live in it, or as a flip property?  If so, would it be profitable?

Hope this helps.
  • January 12 2014
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