My first-time home buyer clientele often express interest in foreclosed properties. The major draw that foreclosures have is that the properties can be purchased at a discounted price. It is not uncommon for the first-time home buyer to think they could get a bigger house. Well let’s consider - -

Foreclosure is a process. Each stage represents a different type of risk to first time home buyers. For example, a property in pre-foreclosure may still have tenants or home owner living there. The property may quite possibly be in poor condition and the utilities may have been disconnected. Foreclosure properties purchased at auction may have a clouded title and they may have undisclosed issues with the property. To purchase at auction will generally require a 10% down payment in the form of cash or cashier’s check. Post foreclosed homes are the least risky however, some foreclosure properties in excellent condition may not be discounted at all. 

Homes over time require money spent on them to replace heating and cooling systems, roofing, flooring, paint, fixtures, appliances and more. A foreclosed home, by definition, has been distressed by the lack of funds needed to afford the mortgage payment and by definition will not be a well maintained” property and most often require upfront expenditures to make them move-in ready.

When dreaming of getting a bigger house the first-time home buyer needs to also consider the higher costs of ownership. The higher taxes, home owner’s insurance, operating costs and maintenance costs add up and they are RECURRING.

First-time home buyers are well served by a buyer specialist Realtor.