Well that is a loaded question. In Mecklenburg County which is mostly made up of Charlotte and surrounding smaller towns foreclosures are on the rise. In fact, I read an article a week or so ago that mentionedthat Charlotte is the highest foreclosure rate in all of North Carolina. Is that all bad? No, not really. Unfortunately, people that are losing their homes right now bought them at the peak of the Real Estate market. Considering we are now at or close to the bottom of the Real Estate market (depending on what report you look at) in Charlotte, the values are there lowest.
I know when I have a buyer considering the purchase of a foreclosure in the Charlotte area I do not discourage it in any way. I find that these type of bank owned homes are relatively easy to negotiate with and generally speaking you can receive a good value for them. Does it mean it is right for everyone to consider a foreclosure? No. There are some drawbacks and other things to consider when you look at one.
First, when you purchase a foreclosure home you are buying the home AS-IS. Now, it does not necessarily mean you have no rights. In North Carolina when you purchasea foreclosure home you have a right to a home inspection. During the time frame you and the bank have agreed upon, you can have an inspector come out to the property and do a thorough inspection of the property. Once you receive his report you have the option of backing out of the deal as long as you are within the time frame agreed upon by you and the bank. Some people are handy type of people (I am not one of them) or have friends or relatives that are and can do it or help them get the items fixed. Others will feel the deal on the house warrants the cost of a few repairs they may need to make to the home.
Second, how is the value in relation to the other homes in the area. Is the neighborhood influx with foreclosures? Or is this just an isolated one in what is a rather stable neighborhood otherwise. How long has it been on the market for sale? Because on the face value the deal may seem good in comparison to other homes that are for sale. But, what if the neighborhood has been or is being over run with foreclosures or short sales? If they have not sold yet, the deal you are receiving may not be the best deal. As more and more homes enter that foreclosure status banks are looking to liquidate them. In Charlotte there is major concern over values of homes with so many people in danger of losing their homes right now. A home thatis for sale in the Charlotte area for over 30 days that the bank owns starts to become a major liability. Thus the bank will tend to be more aggressive in selling that home. And the longer it is for sale the better the deal can become.
For example, I worked with a buyer that looked at a bank owned home in Charlotte. On the face of it the deal was a good deal. In the process of negotiations we came to an impasse of what my clients were willingto spend and what the bank was going to accept. Problem was house was only on market for 10 days when we put the offer in. Well, they walked away and looked around some more. A little over a month went by and they asked about the original house we looked at. Guess what, it was still for sale by the bank. This time we started less and ended up getting to an agreement on terms for less than we had originally offered to pay 30 days prior.
Is this common. No. I am not sure how other areas of the country are faring. I do know in the Charlotte area well priced foreclosures in good move in condition are selling relatively quickly. I have seen homes come on the market for sale and find out the next day it is sold.
So the question of whether a foreclosure is the right first time home depends on you... Can you receive a deal better than one for sale that is not in foreclosure maybe. You have to weigh the costs of repairs and the condition of the home against what you are paying for it and decide for yourself if it is worth the savings.
Dave diCecco
Realtor/Agent
www.davedicecco.com
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