Summary: Should I buy a foreclosure is a question I hear often. Buying a foreclosure may end up costing you more than buying a new home.
If the initial price of a foreclosed home looks attractive, dig a little further and you may be surprised at what you find.
You may find yourself haggling with banks, Realtors, mortgage lenders, and bidding against investors.
You may also find yourself dealing with unknown home repairs and a limited selection of foreclosed homes in desirable areas or in desirable school districts.
If a foreclosed home is really, really that good a deal, and real estate investors haven’t snatched it up, there must be something very wrong with it and/or the sale price…OR, it is in a very depressed real estate area.
If the initial price of a foreclosed home looks attractive, here is a Foreclosed Home Cost Calculator from Fulton Homes. You may be surprised at what you find. Always do the math first.
New homes are not built in depressed real estate areas.
Builders know that a key factor in selling new homes is to build them in well-planned, desirable neighborhoods.
Builders, especially large builders and builder/developers are very good at "adapting" to changing real estate markets.
They can compete in any real estate market and adjust their new home pricing.
They can do this because their suppliers and subcontractors and even land sellers adjust their prices to market conditions.
Here are some excellent reasons why a home buyer would desire a brand new home.
- Design. When you buy a foreclosed home, you're stuck with the design preferences of the previous owner. To make the house your home, you probably will have to spend money to remodel or repair.
- Quality. The quality of building materials such as windows, siding, shingles, flooring, etc is always evolving and improving.
- Energy. Energy efficiency is better in a new home. Newer homes have more efficient and better furnaces, windows and insulation, all resulting in lower utility bills
- Warranty. Though the price of a new home may be more expensive than a foreclosed one, your new home is likely to need fewer repairs or replacements since everything is new...and a new home comes with a New Home Warranty. The piece of mind of a new home warranty from a builder is "priceless".
- Brand New. As a new home buyer, you get that "Brand New" feeling, not unlike that with a "Brand New" car.
- Incentives. A new home builder wants your business and offers excellent incentives and financing options to increase your home purchasing power.
- Financing. Obtaining a new home mortgage or any mortgage loan is often stressful. When you buy a foreclosed home, you're dealing with the bank that owns it, the bank's Realtor, your Realtor and potentially many mortgage lenders. New home builders, however, make obtaining new home loans and new home construction loans and the whole home financing process easy and hassle-free thanks to their mortgage lending connections.
Buying a new home isn't always about money. There are many factors beyond economics that drive the decision to buy a new home.
And, a New Home Buyer Helps Build America...One New House at a Time!