You get what you pay for

I read a not-so-interesting article yesterday regarding the purchase of a foreclosed property. The title was something along the lines of 'Foreclosure money pit ends up costing much more.' What a shocker (insert eye-roll here).

During a typical month as a real estate agent I visit with many buyers that are looking to purchase a foreclosed property for 'pennies on the dollar'. Some of these buyers think they will be purchasing a 'move-in ready home' or something they can flip for a 100% return on their investment with little or no effort/cost. Time for a 'realty' reality check.

Granted, there are foreclosed properties available that are 'move-in ready' but there are many more that are not. Equally, if you are thinking you are going to purchase a property that can be flipped for big bucks with just a 'Swiffer' and a can of 'Carpet Fresh', think again.

'You get what you pay for.' How true. Here is the secret to save you BIG headaches when purchasing a foreclosed property: SEE the existing property condition with your eyes wide open; UNDERSTAND what it will cost to bring the property up to condition; have the necessary RESOURCES to get the job done; JUMP when you find what you are looking for. (Look, I did an acronym! 'SURJ' - See, understand, resources, jump. OK, so it is not a great acronym. . . [ahem].)

Virtually all foreclosure properties are being sold 'as-is'. What that means is there is no warranty, there are no refunds. You bought it, you own it. The buck did not stop here, it stopped elsewhere - and it is not coming back. If there is a 'surprise' problem that needs to be addressed after the sale your only real option is to find a mirror and have a nice heart-to-heart talk with the new owner - you.

Please understand: There are many good values in the foreclosure market - and occasionally, there is a real steal. But if you are going to capitalize on such a deal you need to SURJ! Know what you are looking for and be positioned to act quickly when you find what you are looking for - because good deals do not wait around!

If you are the type of person that can't tolerate a little risk exposure, the foreclosure may not be for you. In that case there are probably better options - such as properties that are not being sold 'as-is'. I think it is worth noting when a foreclosed property is sold, the owner (often times a bank) requires the buyer(s) to accept and sign multiple documents that basically repeat the same statement over and over, "Mr./Mrs. Buyer(s), do you understand you are purchasing this property 'AS-IS'?" Hmmm. I wonder if they are trying to make a point?

Questions on foreclosed properties? Call me.

Jon Drews, Broker Associate with Century 21 Vista.

Visit my website at www.RealEstateFergusFalls.com to view foreclosed properties plus much, much more!