What are the benefits or drawbacks to expanding my home search to include FSBOs and foreclosures?

Question

How does the buying process for foreclosures or FSBOs differ from homes sold by agents?

Answer 1

Foreclosures tend to be run down, lacking routine maintenance, and have lots of issues when you buy then- and the bank won't fix a darn thing before the closing.  They can also have lots of liens on them from the previous owners.  There are some great deals to be had, but be ready for the expense of suprises you'll find.

Nothing at all wrong with FSBO's.  If you're working with a realtor, the people selling may refuse to pay a commission to the buyer's agent.  In that case, you'd probably have to go at it on your own without an agent.  Definitely not a bad thing if you have a general knowledge of real estate transactions.

Answer 2

Foreclosures are easy and straight forward, except there are no disclosures, it is buyer beware.

You have the same buyer beware problem with FSBO, although there are disclosures you have people who are not always sure of the laws.   You will also find they want more then the house is worth, one reason they refuse to pay an agent.

If you go FSBO make sure you have an very through inspection and an attorney present when you sign anything.

Most FSBO sales end up in court, usually because a law was broken.

Answer 3

Some foreclosures need help, but others are look fine and are in good shape.

http;//infoonforeclosures.blogspot.com  

Answer 4

You should always look at all properties which are available for purchase.  Any available property might suit your needs.  

In foreclosures, you are basically buying a property 'as is', so you need to have a professional inspection so that you know what might be wrong with the property (frankly the same applies to ANY property in which you may be interested)

Be especially cautious with FSBO's since those sellers are not represented by professional real estate agents, and they may have issues (or may not) which an individual seller may not disclose.

Generally speaking, FSBO's think they can save the cost of professional representation when selling.  In reality, the price of properly and professionally represented properties includes the cost of any brokerage fees.  

If you elect to purchase a FSBO, do not be afraid of tendering an offer based upon a price reduction of the cost of the brokerage fees.  There is NO reason why you should allow a seller to pocket the savings allowed from not having brokerage fees involved.

I strongly recommend that you use a real estate agent contracted to YOU, to represent your interests, any time you are considering purchasing real estate.