JL's Columbia SC Real Estate Blog: Is That Foreclosure the Deal of the Century, or the Trap of the Decade

Is That Foreclosure the Deal of the Century, or the Trap of the Decade

Is That Foreclosure the Deal of the Century, or the Trap of the Decade

Foreclosed Homes for Sale in Columbia, SC

 I'm guessing that by now the secret is out when it comes to many markets being over run by foreclosures and short sales. Here in Columbia, SC, we've been pretty lucky compared to the national average, but we do none the less have our fair share of bank owned properties.

 Due to the popularity of foreclosures in conversation, commercials, and get rich quick infomercials, most would be home buyers start their search in this direction. They only thing they know is that a guy in a nice suit on T.V. or the news said that the best deal they can get is in the foreclosure market and that's where their headed. After that great deal.

Foreclosed Homes for Sale in Columbia, SC But there's a few things that guy in suit is a little reluctant to explain. For the most part, at least here in Columbia, foreclosed properties are not usually in the best shape. Actually it's rare to find one that you don't feel like you need to take a bath after viewing. I may be exaggerating a little, but you get the picture, they are by no means perfect, move in ready homes.

 Usually there is a lot of cosmetic work that needs to be done, and at least in the homes I've shown, the appliances are gone. So, you really need to think about the amount of money you will need to spend in order to make the home livable.

Typical Work to be Done on a Foreclosed Home

  • Appliances - Let's say you go really cheap and get a great deal on a set of appliances. There are display centers and so on out there that do have great sales. So let's say you spend $1,500.00 on a Stove, dishwasher, microwave, and refrigerator. Let's face it, you know you will spend more because no one gets the cheapest thing in stock.

 

  • Carpet and flooring - Let's say it's just an average sized home around 1,300 square feet and has just carpet throughout the bedrooms, living room, and hallway. If you get the rock bottom price from a flooring company around town, you may pull that off for $1,500. Again, you will likely spend more, but let's be conservative on our pricing. If the home has hardwood floors, it will likely cost more than that to strip and refinish the floors. Not to mention that there will likely be damaged portions of the floor that will need to be replaced all together before the refinishing is done, that costs money as well.

 

  • Outside repairs - Let's say that the home has a deck or a porch on the back. Usually these need to be completely redone on foreclosures that I have seen in the Columbia market. Maybe the bottom portion in alright and you only have to resurface the deck, well that still costs money too. For this one we will say that you find a contractor who is willing to come out, rip up the old deck and replace it for $3,500. A lot of this will depend on the size of the deck, the price of lumber at the time, and who does the work for you. There also usually some work to be done to the siding of the homes. Some are simple vinyl repairs and others are Masonite. Masonite is no longer made, so if you buy a home that has this type of siding and the siding is damaged, you can't repair the damaged siding. You have to just replace the siding or deal with a strip of vinyl somewhere on the outside of your Masonite home. At the very least with a Masonite home, you will need the outside painted. So, for siding repairs and/or paint, let's say you toss in another $3,000.

 

  • Roof and Windows - If you're lucky, the only thing you will need to do is replace the shingles with some new asphalt shingles and there will be no water damage to the plywood underneath. So for this one we are going to say that you get new shingles put on the roof for $3,000. Again, this will depend on the size of the home, the type shingles, and who does the work, you will likely spend more than my estimate. Also, there are usually a few windows that have managed to find their self broken in REO properties. We're going to say that you get off light and only have to replace two and you get it done for $600.00.

 

  • Plumbing and Internal Water Damage - Usually the toilets and some of the sub-flooring in bathrooms is not in such great shape. There could have been water leaks from the toilet or from the sink and this causes water damage to the floor and the vanity cabinet in the bathrooms. So let's say you replace two toilets and one vanity cabinet. Materials plus labor, you might get out of this one for around $1,200.00.

Foreclosed Homes for Sale in Columbia, SC

 Now, believe it or not I can continue on with this list on issues like interior paint, damaged cabinets in the kitchen, and missing light fixtures. But since we are already over $14,000 in repairs I think I have some what gotten my point across. There is a lot of work to be done to the majority of these homes before you can move in and most people buying a new home do not have an extra $15,000 to $20,000 laying around to spend on repairs.

 Plus, if you don't pay close attention to where you buy the foreclosure, by the time you buy it and make the repairs, you may have more invested than it's actually worth in this market. That all depends on the purchase price, repair price, and the value of the homes in the community. Just because you spend a ton on a house, doesn't mean it's worth a ton when you're through. It still has to appraise and appreciate in the eyes of the market.

 The fact of the matter is that not all foreclosures are great deals. Sometimes you would be better off buying a resale in the same community or these days with all the deals from builders, taking a close look at what you money would buy in a new home. Just something to think about.

 

www.jlboney.com

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JL Boney, III - Columbia, SC Realtor - Coldwell Banker Residential Real Estate

 I specialize in Columbia, SC real estate and the surrounding areas, including Blythewood, SC, Kershaw County, Fairfield County, and Lexington, SC. If you are in the market to buy or sell a home in Columbia, SC or any of the surrounding areas, I would love the opportunity to speak with to see how I can help. Thanks for reading and feel free to contact me if I can be of service to you.

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Comment balloon 9 commentsJL Boney, III • September 25 2009 01:06PM

Comments

JL --- this is an excellent post --- should be featured -- I like your list and you are so right --- people think they are getting a good deal when they would have been much better off not to have purchased the foreclosure.


       Mama Liz

Posted by Liz Loadholt, Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC (Liz Loadholt- AgentOwned Realty- Covering SC) about 9 years ago

JL...To most people, a fixer upper means a bit of paint and carpet.  Something that they don't have to do.  I always grill my clients as to what they think a fixer is and how much do they want to do.

Posted by William Feela, Realtor, Whispering Pines Realty 651-674-5999 No. (WHISPERING PINES REALTY) about 9 years ago

JL- your post is so accurate.  In Sumter we see much the same thing and buyers want that deal.  Then they begin to realize the work and expense involved.  Or we see a buyer who wants more house than what they qualify for so they look at foreclosures not knowing that their lender will probably not approve their loan unless they have money to put down on the home and money to make the repairs. 

Posted by Kim Peasley-Parker (AgentOwned Realty, Heritage Group, Inc.) about 9 years ago

Yup...that's pretty much what accounts to being aware of what may happen when purchasing a foreclosure and you definitely have a good list of 'what to look out for'.

Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Liberty Homes) about 9 years ago

You covered it all JL.  You get what you pay for and people who are looking for a bargain instead of a home make me tired.   I'd rather try to find your dream home, at any price range, than help you find a deal.  And sometimes, like you said, it doesn't turn out to be such a good deal after all.

Posted by Susan Mangigian, Chester & Delaware County Homes, Delaware and Ches (RE/MAX Preferred, West Chester, PA, RS152252A) about 9 years ago

No I don't think that you are exaggerating any, I come home and shower after looking at some of these pigs. The bad part is the REO agents that we deal with.

Posted by Chip Jefferson (Gibbs Realty and Auction Company) about 9 years ago

JL:  I showed a foreclosure last night with an active leak in the bathroom shower.  These banks just don't get it.  Who wants to take on such an obvious problem that has already destroyed tile and wood flooring?

Posted by Chris Ann Cleland, Associate Broker, Bristow, VA (Long and Foster REALTORS®, Gainesville, VA) about 9 years ago

Liz- There are many times when a foreclosure is no deal at all.

Bill- People need to know what to expect out of these properties.

Kim- There are a lot of common misconceptions on the part of the public when it comes to these houses. That's why it's important for us to explain things to them.

Sally- That list could certainly be a lot longer.

Susan- I think I would rather be searching for someones dream home as well.

 

Posted by JL Boney, III, Columbia, SC Real Estate (Coldwell Banker) about 9 years ago

Laura- I may not have now that I think about it.

Chris Ann- They certainly don't want to repair any of the properties, that's for sure.

Posted by JL Boney, III, Columbia, SC Real Estate (Coldwell Banker) about 9 years ago

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