Should I buy foreclosed Arizona Real Estate?
Arizona has the 3rd highest rate of foreclosures and pre-foreclosures in the country and more home buyers are drawn to foreclosed Arizona real estate because of the bargain prices. Obviously, the opportunity to buy a home below market value is a huge benefit to buying a foreclosed home. However, there are also some risks that bargain hunters need to assess:
1. You might not have time to do research: If you decide to buy a foreclosed home at auction, you won’t have time to research it. Liens will be wiped clean and you will be responsible for any property taxes. There is also no home inspection, and homes sell sight unseen. You could also get into a bidding war and end up paying more that you intended. Bargains can be had at auctions, but the risk may not be worth it.
2. Your profit can disappear with repair costs: Many foreclosed homes can be bought at a great price; however, if you don’t factor in the costs of repairs and maintenance your profit margin can be slim or next to none. For example, let’s say you buy a foreclosed home at $300,000 that’s worth $350,000. But the previous owners trashed the place. So you have to spend, $10,000 on carpet and paint, and then another $15,000 on the leaky roof and mold that has been discovered. Throw in more repair costs and your closing costs, and now your foreclosed home doesn’t look like so much of a great deal.
3. You run the risk of legal entanglement: As long as the owner still occupies the property, you could end up trying to process an eviction or finding yourself liable for back taxes on the property. Make sure you have an experienced Arizona real estate attorney or realtor working for you in order to negotiate aggressively and to mitigate your risks.
4. You may have to evict the current homeowners: Things could get nasty if you have to evict lingering residents from their lost home. Plus evicting homeowners can be an emotional process for you. Be prepared for previous owners to take out their anger and disappointment over the foreclosure of their property if you have them evicted.
This is a buyer’s market and there are many houses available at great deals that aren’t foreclosed. However, if you really want to buy foreclosed Arizona real estate, look for pre-foreclosures and don’t buy sight unseen. Buying a pre-foreclosed home will give you time to get a comparable market analysis and have the home inspected. You’ll also have time to negotiate the best deal. Whatever you do, don’t downplay the role of a qualified Arizona realtor to help you find and purchase foreclosures at the best possible prices. If you are looking to buy a home for your own personal residence or as an investment, please give me a call at 602-904-1496.
2 Responses to “Should I buy foreclosed Arizona Real Estate?”
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I know at least one person who has bought a foreclosed property….and ended up selling it in a short sale.
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