Shortcomings of Foreclosed and Short Sale Homes

One of the very first questions today's homebuyers might ask themselves is, "Should we buy a brand new home, a foreclosure or short-sale?" For some buyers there's no question. They won't buy anything but new construction. They are happier in a home that has never been lived in. The advantages of buying a brand new home make it an easy choice for buyers. It's fresh, clean and ready to move-in. There's no need to worry about inheriting original fixtures from circa 1970, tearing down unsightly improvements or even worse, incurring costly repairs due to neglect.

But what about those who are drawn to the idea of buying a foreclosed or short-sale home (a short sale is relatively new term to describe a sale in which the lender agrees to accept less than what the current homeowner owes) at a discounted price? While these methods of buying a home are becoming more common, says Jeff Shore, Founder and CEO of ShoreSelect, a real estate consultation firm with offices in California and Texas, smart homebuyers need to be wary of the pitfalls of choosing to purchase or even spend the time looking at foreclosures or short-sale houses.

"These types of deals can take much longer than a typical real estate transaction," says Shore. "In this current market, you have to be prepared to be patient." Whereas, a brand new home purchase could close within 30 days, a short-sale could easily take months as the lender sits on the deal looking over multiple offers, hoping to get a little more out of the exchange, Shore continues.

Are they worth waiting for?

"Not always," adds Shore. "Since these houses were owned by homeowners in financial trouble, buyers shouldn't underestimate necessary repairs -- which could make what seems like a good deal a poor deal. Short-sales and foreclosures could run into a lot of money for people who don't have it to begin with. But since very few people pay cash for these repairs and upgrades, the finance costs can add thousands more," he says. "Take for example a very normal improvement to a foreclosure or shore-sale: the kitchen. A stainless steel appliance package alone will cost around $5,000. Put it on your Visa card and you could pay $300 a month for those appliances. Now add cabinets, granite countertops, and new flooring, and you could add more than $1,000 a month in improvements to the kitchen alone! Imagine how much new home you could buy for the same price."

Shore noted foreclosed homes almost always need other basic improvements including new carpet, fresh paint and updated lighting and plumbing fixtures. "Sometimes the previous property owners have neglected the home before defaulting on their loan. Hidden damage could be extensive and costly with no home warranty to take care of those costs," Shore adds.

Dino Ouaddi knows. He and his wife checked out several discounted homes in foreclosure before deciding to purchase a brand new, full-appointed ranch-style model home at William Lyon Homes' Bridle Creek neighborhood in Riverside. "Right now there are many, many foreclosures on the market. We did our homework and decided that the unknowns of buying a home this way was definitely not for us," asserts Ouaddi. "I didn't want to spend the next few years fixing up a house in my free time to bring it up to our standards."

Shore's advice to buyers is simple, "Live in the right home. There's no reason to compromise in buying the home that is right for you."

Ouaddi adds, "William Lyon Homes offered many great benefits in comparison to repo, resale and short sale homes that were important to us, including a new home warranty. Plus, we will be able to move-in with the satisfaction of knowing that William Lyon Homes stands behind their quality to maximize our enjoyment."

Buyers will find a variety of amazing new home opportunities right now at William Lyon Homes' Southland neighborhoods. For immediate details on how a William Lyon home compares to used homes, visit http://www.lyonhomes.com today!