Outer Banks Real Estate Blog

Outer Banks Real Estate- Outer Banks Foreclosures: Are They A Good Deal??

In yesterdays post I covered Short Sales on the Outer Banks so today's topic is on Outer Banks Foreclosures.

Are there any foreclosures on the Outer Banks I can buy?? That is the #1 question I have received over the last 6 months. With the answer being yes, there are plenty of Outer Banks foreclosures to choose from. Are they best deal on the market?? That answer is Yes and No!!

Let's tackle the Yes first:

By nature foreclosures are a great deal and here on the Outer Banks that also rings true. I have seen houses that were originally listed for well over $1,000,000 sell for $800,000 or less. Most of these homes are the larger vacation rental homes that were purchased over the last 3 to 5 years. Why are all these homes going to foreclosure in the first place if they are producing weekly rental income? The short answer is that home values have dropped so much on the Outer Banks that sellers can no longer sell their house for what they paid for them as far back as 2003-2004. When you throw in the fact that most of these homes were purchased with 100% financing plus a seller who can no longer afford to pay the mortgage you have conditions ripe for foreclosure. This offers a buyer with available cash and who can close quickly an opportunity to come in an get the great "Deal" that everyone is looking for. There are foreclosures everywhere on the Outer Banks in all price ranges that will offer a tremendous opportunity to get a beach house below market price that has a lot of room for appreciation.

Now as good as a foreclosure may sound here are a few reasons why they may not be the best deal on the Outer Banks:

Fist off most homes on the Outer Banks are used as weekly vacation rentals that tourists rent out each summer giving the owner a nice income to help pay for the house. Each summer millions of people rent these houses for their vacation and while they are down here book a house for the following year. When a house goes into foreclosure the bank will not allow the house to be occupied by anyone, thus no more weekly vacation rental income and no future rental bookings. That means if you are looking to buy and count on the rental income to help pay for your beach house like most people do, then this will put you behind. Also, since sellers are losing the house to the bank they normally take everything out of the house including all the furniture, appliances, and anything else they can sell or use. When you purchase a beach house on the Outer Banks 99% of the time the house comes fully furnished all the way down to the forks, plates, tv's, and linens. So with a foreclosure you will have to buy all new furniture and appliances. One thing most people forget is the bank has the final say so on price. In many cases the bank will dictate what the list price will be and it may not be at the current market price because they are losing so much money. The last thing and in my mind the most important is that the house will be sold "As-Is" meaning its buyer beware. I highly recommend to all my clients that a home inspection be completed before closing on any foreclosure. The last thing you need is to think you got a "Deal" only to find out you purchased a money pit.

So do you buy a foreclosure or not??

Do your homework!! This is where your Realtor comes into play. I work with my clients to find out if a foreclosure purchase is the right thing for them. You have to ask yourself do I have the money to buy all new furniture, paint, or carpet even if I get the house below market. Or can I go out a by a house that is ready to go for the same price as it would cost to fix up the foreclosure. Sometimes the foreclosures are too good to pass up and others you need to get all the facts before you jump right in. I advise my clients to look at everything on the market and not just focus on the foreclosures.

Remember, just because it says "foreclosure" on the listing don't automatically assume it's the best deal!! I have seen many houses listed that are better deals than the one that has "foreclosure" on it.

If you would like more information go to Outer Banks Foreclosures to get an up to date list of all foreclosures or submit your question. If you own property on the Outer Banks and find yourself facing foreclosure please contact me. There are many options available to foreclosure that I can discuss with you.

Published Friday, August 29, 2008 10:19 AM by Matt Huband