Purchasing a home in the Keys after Foreclosure

Should I Consider Purchasing a Home After Foreclosure?

Foreclosures on the market are normally available, regardless of the condition of the economy. Buying a foreclosure might or might not end up being a wise plan of action. Following are things to consider before you take the leap into purchasing a foreclosure.

Is it best to buy a foreclosure or delay the process until the bank or mortgage company has completed their process? Typically you will get a better deal, if you make your purchase during foreclosure. However, you could be truly getting the property "as is" with few, if any, guarantees. Making a proposal after a home becomes an REO (real estate owned) of the lender may cost someone a little more, however, the key owner/lender has more then likely spent some funds in repairing some problems and/or giving the home and property a little TLC to make it more saleable.
Is the property truly a great buy?
Many people mistakenly assume that all foreclosures equate to a bargain purchase. Consider that belief a bit. First, most foreclosures take place on real estate where little equity exists. For example, people owning a home worth $250,000, but having only a $100,000 first mortgage will typically never allow the property to be susceptible to foreclosure. They might be throwing away $155,000 in equity.
Contrast that example with another $250,000 home with a first mortgage balance of $245,000. If you could not afford that home, you might be much more likely to let it go to foreclosure since you are losing little money. You, being the buyer, might need to pay near the FMV (fair market value) of $250,000, even if it were a foreclosed property or home.
Are there any expensive repairs that should be completed before you resell or stay in the property or home?
The nature of home loans may make it faster and easier to purchase a house in great condition for a higher price than to request "rehab" or repair dollars to get integrated to the loan. Often, you may be required to fund major repairs out of your own pocket.

You should find MLS (multiple listing service) listings of similar homes for sale in the same neighborhood as your preferred foreclosure home to compare prices. Is the price of the foreclosure substantially lower than current prices for matching homes? When the price is similar, you may be wiser to buy a house from a professional real estate professional. Should the purchase price for the REO be substantially less than typical FMV for that area, you might have an actual bargain.