Terry Abbott

Just read a great article by Tara-Nicholle Nelson regarding foreclosure myths buyers perceive.

1) Foreclosures need a huge amount of work. Realtiy is most foreclosed homes need only cosmetics, such paint and carpet, that most most home buyers do anyway.

2) Foreclosures sell at massive discounts, compared to other homes. Reality is their discounts are much more modest when compared to their value in today's market and prices of simalar homes.

3) Buying a forecloaure is risky. Buying foreclosed properties that are listed on the open market are no more risky than "regular" homes for sale.

4) You can't get inspections on foreclosed homes. False, while most banks sell their inventory "as-is", they encourage buyers to get an inspection to limit their liability.

5) There are hidden costs to watch out for when buying foreclosed homes. False, when you buy a bank owned property that is isted for sale with an agent, the closing costs are the same as they would be if you bought a non-foreclosed home.

6) Foreclosures are more likely to lose their value than "regular" homes. Whether a home loses its value or not has to do with the dynamics of the local market, including the areas supply of homes, demand for homes, interest rates, and the employment market.

7) Most foreclosures happen when the homeowner just walks away. Only 1% just walk away. Most foreclosures happen when the owners lose their or their mortgage adjusts to the point where they cannot pay the mortgage.

8) When you buy a foreclosure, you should lowball the bank - they are desperate to get these homes off their books. Not the case, they simple are not desperate enough the "give" these properties away. Many actually sell for above the listed price.

9) You need to pay cash for a foreclosure. You may pay cash or get a mortgage if you purchase a foreclosure that is listed with an agent on the open market, as you would a non-foreclosed home.

10) It's easier to buy a foreclosure with bad credit if you get a mortgage with the same bank that owns the property. Think about it: why would the bank want to end up with the same property as a foreclosure, again? You might get some costs (appraisal, etc.) credited to the buyer who use the bank as their lender, but the buyer must meet the same credit, income, and other qualification standards as anyone else.

On a recent condo closing the lender required insurance for the interior walls, cabinets, appliances, etc. For years the Associations took care of the insurance for the structure, but apparantly that insurance isn't covering the interior. In the past, I've always recommended insurance for the owners contents.

Any comments?