Top 10 Myths About Buying a Foreclosure in San Diego

June 10, 2010kristaNo CommentsBuyer's Brew

There are lots of choices when it comes to foreclosure these days, there have also been quite a few multiple offer situations lately, with buyers feeling at war with investors! People usually have a lot of questions on how it all works. Here are the myths:

1. You have to pay for foreclosures in cash.

If you are purchasing at auction then you do have to pay for a foreclosed property in cash, there have been a few exceptions but very few. If no one buys the house at the auction, the next step is for it to be put on the multiple listing system (MLS) with all the other properties and open to the general public to see and bid on.

2. It’s easier to buy a foreclosure through the bank that owns the property.

That would seem like it would make sense. I have not seen or heard any data that supports this idea at all. Actually the foreclosure agents I’ve talked to laugh at the idea, so if you’re planning on buying a foreclosure, get pre-approved with the lender you feel most comfortable with. Odds are that the bank which owns the property will require a second pre-approval. This IS important.

3. You can lowball the bank because they need to get the property off their books.

To be honest with you, foreclosures are the most desireable properties. There is something mysterious about them that attracts everyone to them. I could write more blog posts and have higher traffic to this site just by writing about foreclosures.

And that’s how it is with foreclosures on the market. If you have a VA or FHA loan, odds are that you will feel a little like you are at war with all the investors that are stepping in and swooping away properties and paying cash. You can get some great deals, but trust me, you will have competition.

4. Foreclosures will hurt my property value.

Lately it looks like foreclosures are getting lots of offers, you can get an answer fast, so investors AND first time buyers alike flock to them.

Short sales have been a real downer on the people’s property values. The agents, in desperation to get offers on the house under list the price.

5. There are lots of hidden costs to buying a foreclosure.

Nope. Same costs as any other piece of fine San Diego real estate. Now, you should definitely check and make sure that there are no per diem fees, and if there are, a good agent can usually work around them so you don’t come out of pocket. If you don’t know of a good agent, email us at [email protected]

6. Buying a foreclosure is risky.

49% of people that surveyed think that buying a foreclosure is risky. Nope again. Once it is on the multiple listing system and escrow is opened, everything works the same, so sit back and enjoy the ride.

7. Buying a foreclosure means you get a discounted price.

Remember point #3? The foreclosure agents put very appetizing prices on those homes to get more offers. Multiple offers tend to drive the price up. Once again, you may feel like a warrior in some foreclosure situations.

8. You have to put a lot of money into fixing up a foreclosure.

This may or may not be true. There is some San Diego real estate I’ve seen that was NOT the finest, however, I have seen some beautiful foreclosure. Guess it depends on how angry the sellers were.

9. What if there were liens on the property before it was foreclosed.

I don’t know about outside of California real estate law, but you can sleep at night knowing that NO property can be handed over to you without a clear title, that means no liens and no worries.

10. Do I have to pay the property taxes that the past sellers missed?

Once again, get your z’s in peace because you will not be losing sleep over this. The delinquent property taxes are taken care of by the bank not you.

Overall, you may have to go to war with other offers on the property that you’d like, but I will tell you this, there are lots of good deals out there and the buyer who buys low and sells high will always win. I hope that you are one of them.