Mobile Header Banner

Buying a Foreclosure – What Buyers Need to Know

Buying a Foreclosure – What Buyers Need to Know

Buying a foreclosure comes with risks. You might score a great deal, but a foreclosure in a good Hawaiian neighborhood might sell for close to its market value. While the number of foreclosures has dropped dramatically in the past few years, as of late 2016 the Hawaiian foreclosure rate was 1.7 percent, according to real estate information intelligence company CoreLogic. That puts it fourth in the nation for the highest inventory foreclosure rate, behind New Jersey, New York and Maine. That means the bargains are here in Hawaii, but you need to know what to do to find them.

Bank-Owned Properties

Foreclosed properties are bank-owned, also known as real-estate owned (REO). There are advantages to bank-owned properties. The house costs the bank money, and they want to get it off their ledgers as soon as possible. There’s no emotional attachment to the dwelling, so that isn’t a pricing factor as in some privately owned homes. The downside: the bank probably doesn’t have any maintenance records for the property, which hinders assessment of the house’s actual condition. The bank is unlikely to make any repairs.

As Is

When you purchase a foreclosure, the home is sold “as is.” You probably know that, but it’s imperative to know just how much work is involved. That’s why you should never buy a foreclosure sight unseen. It’s not unusual for just about everything – plumbing and lighting fixtures, electrical systems – to be gone or unusable. Photos and videos won’t tell the complete story. Even a great Hawaii location can’t make up for the fact that you may have to virtually reconstruct the home to make it livable. Spend a few hundred dollars and have the house professionally inspected. If the inspector finds it in acceptable condition, have a licensed contractor provide an estimate for any necessary repairs. Only then do you know what you’re getting into, and an idea of how much it will cost to make the house livable. On a national average, foreclosed properties sell for approximately 18 percent below market value. Crunch the numbers to ensure repairs make buying a foreclosure feasible.

Use a Real Estate Agent

Improve your chances of success with a foreclosure by using a real estate agent. These types of sales are often more complicated than traditional purchases, and a knowledgeable realtor can help you through the process and extra paperwork. An experienced real estate agent knows what to look for in any distressed property, and the right valuation for the home. They also know the “comps,” or recent sale prices for similar properties.

 

Contact Us
If you’re looking to buy or sell a home, or are interested in a foreclosure, call Island Realty Group, LLC today at (808) 689-7407. We’ll help you sell your current house and find you the house of your dreams.