Foreclosure Bargains May Be Sugar Coated Bitter Pills In Savannah

July 24th, 2008 | Tags: Foreclosure

Apparently foreclosure sales look great and sometimes they are big deals but one needs to warily step in. The foreclosure bargains may be sugar coated bitter pills. In different places across USA foreclosure sales are making a lot of noise. Matthew Allan of Keller Williams Realty Savannah Downtown deals with property. He says that it is a problem with everyone thinking that foreclosures are good bargains. It is a known fact that it is a buyer’s market but nevertheless deals are not quite all that simple. There is the impression that banks are simply giving away their properties for a song but that is not so, said Sandy McCloud of Century 21 Fox Properties.

Since the first half of 2006 local foreclosures have been rising in Savannah. In 2005 726 foreclosures had been noted but in 2006 it shot up to 1,508 and in 2007 to 1,803, according to ReatlyTrac. Already through the first six months of 2008 there has been 1,196 foreclosure postings.

There are two types of foreclosure related sales. The first kind is the court auction and the second is when the bank repossesses the property and then sells it directly in the open market. At the court auction the bank must sell the house for an amount that will cover the mortgage dues. In the present situation that is difficult because the worth of the house is more often than not less the loan dues. At the court auction the buyer has to be prepared with ready cash to clinch the deal.

Most of the court auctions fail. When this fails the bank lists the foreclosed property with a realtor. Then the buyer will make the purchase like it would with any other unit.

There are risks with court sales because the house has to be bought on an as-is basis. It usually translates into huge repairing costs – painting, carpeting and you name it. The previous owners, having been foreclosed upon vent all their frustrations on the property and vandalize it as much as they can before vacating. There are often large holes in walls and the fittings are all in disarray. There is a lot of paper work with bank owned properties.

Realtors spare no bones to warn their clients about the negative side of buying foreclosed houses. Taking everything into account it is often better to buy units in the open market.