March 21, 2011
Why Buy a New Home From a Builder vs. Bank Owned Foreclosure?
In today’s housing market, we frequently encounter home buyers weighing the pros and cons of buying a new home from a builder vs. a foreclosed home from a bank. Although there are many opportunities to be had in the foreclosure market, there is a common mis-perception that foreclosures offer the best home value in today’s market, which isn’t necessarily the case. It’s important to consider all of the following when choosing between a distressed property sale vs. buying a new home directly from a builder:
- Warranty: Most new homes from builders come with warranties covering many issues that may arise with the home during the designated coverage period. Bank owned foreclosures are typically sold “as is”, without a warranty, leaving the buyer responsible for any property issues post sale.
- Seller Responsiveness: New home builders are in the business of selling homes and typically provide prompt and timely responsiveness to potential buyers. In today’s market, agents selling bank owned foreclosures (REO Agents) are often overwhelmed by the number of listings and too busy to handle the volume of calls/interest on their listed properties, frequently not responding to interested buyers. Additionally, when it comes down to making an offer, new home builders will typically provide timely responses to offers, while banks usually have several layers of approval required to respond to an offer, sometimes delaying their response.
- Home Condition: New homes are just that … new and in move-in condition at close. Foreclosures, on the other hand, are rarely in turnkey condition. Often, homeowners stop caring for the property when they realize the home is in foreclosure and many strip the home, vandalize it or leave it sitting mid-construction. Many of these distressed properties suffer from deferred maintenance which can lead to bigger issues down the road.
- Finishes & Upgrades: With new homes you’re also typically able to provide input on home finishes and upgrades (if you get in early enough) to make your new home just what you wanted. With bank owned property, you get what you get and it’s unlikely you’ll convince the bank to change or upgrade features in the house.
Please let us know if you have anything else to add!
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This post was written by Greenbank Development