Monday, August 31, 2009

Tips on Purchasing a Foreclosure - Part 1

This will be the first in a series of posts about the process of purchasing a foreclosed home. It's a tough process and takes a certain mindset, personality and a LOT of patience. Micheal and I learned a lot going through the shopping and buying process that might be helpful.

Part 1 - Getting in the right mindset.

If you're purchasing your first home you might find out very quickly that there may be a large discrepancy between your "dream home" and what you can realistically afford. Especially if you grew up in Kansas and you're now purchasing a home in the greater Washington DC area. To say that we were shocked by what our preapproval could purchase would be a gross understatement.

After much searching we soon realized that even with the recent downturn in the market the only houses that were in our price range were either short sales or foreclosures (more on the difference between these later.) So the dream of walking into a pristine beautiful home was let go and the mindset of 'what can we feasibly deal with' and 'what can we feasibly fix' was embraced. It's definitely not puppies and rainbows but it's reality. We are very fortunate in that both Micheal and I have experience renovating homes and with an electrician, a plumber, a general manager, the owners of a real estate business, and a landscaper a phone call (unfortunately 1,100 miles...) we had faith that would could transform the proverbial "diamond in the rough" into our dream home.

So in my humble opinion these are some general tips on the who, what and when of purchasing a foreclosure.

If you have unlimited time and funds - anyone can buy a foreclosure! Unfortunately we did not have either of these...

Purchasing a foreclosure is not for you if:
  • If you are easily grossed out. We walked into homes filled with mold, bugs, trash, food on the counter from who knows when and regularly just filth.
  • You don't think you could live and renovate at the same time. This has been a very taxing experience and we're only just beginning. It's difficult to finish projects and there is always something to fix...
  • You do not have A LOT of patience. We looked at what seemed like an endless stream of houses that all seemed to blend together including several days of marathon (exhausting) searching (Thank you Sharie!!) - the searching process requires patience, the purchasing process requires even more patience, and then renovating your new home, in our case with your new spouse, might test the patience of a saint.
  • You are an pessimist. To do this you absolutely have to be able to see the bright side, the potential and the silver lining. You can easily get bogged down in feelings of defeat and frustration and become amazingly overwhelmed.
  • If you can't curse the person who lived in the house before you! Someone has to take the blame for all the ills that you will experience during the renovation process. I don't know how many times Micheal and I just look at each other and say "WHAT WERE THEY THINKING??" Yellow walls with blue trim, really?? You're going to need to blame someone, directing it away from those in your direct presence is a good thing.
Purchasing a foreclosure IS for you if:
  • You can see the beauty and potential in anything.
  • You are willing to sacrifice comfort in the short run for the long-term greater good.
  • You are type A enough to help navigate the difficult purchasing process but type B enough to make it through the renovation process.
  • If you go to garage sales or cruise craigslist looking for old furniture that simply needs a makeover.
  • You either have the skill or money to transform your foreclosed house into a fabulous home.
Obviously I'm not trying to encourage or discourage anyone from purchasing a foreclosed home, but from my experience it's not for everyone.

Stay tuned for Part 2 - I'm ready to start what do I do?

1 comment:

Mom said...

I couldn't have said it better myself!