Transcripts

"Money File"-Buying Foreclosures

SUSIE GHARIB: In the "Money File" tonight, the dos and don'ts of buying foreclosures. Here's John Simons, senior personal finance editor at Black Enterprise.

JOHN SIMONS, SR. PERSONAL FINANCE EDITOR, BLACK ENTERPRISE: Though the economy appears to be in recovery, the home foreclosure crisis is far from over. Last summer, more than a million homeowners received a foreclosure notice in the mail. Mortgage defaults are expected to rise next year. These statistics, though painful for stressed-out homeowners, spell opportunity for prospective buyers. During July, August and September of this year, roughly a third of homes sold in the U.S. were foreclosures. In some cases, foreclosed homes sell for 70 percent less than the previous owner paid. That sounds like a great deal and it is. But buying a foreclosed property presents unique challenges. These transactions take much longer than a traditional real estate sale. At Black Enterprise, we still believe in home ownership as a foundation for building wealth. But when it comes to buying your dream house in a foreclosure sale, we recommend first that you work with a realtor who has experience with distressed properties. You need an agent who has the patience and wherewithal to guide you. Next, don't shop on price alone. The cheapest properties often present the biggest headaches. Look for homes where the previous owner has already moved away to avoid legal wrangling and messy evictions. Immediately after you make an offer, hire several inspectors to take a thorough look at the home. Avoid neighborhoods with high concentrations of foreclosures. And last, don't get into aggressive bidding wars over these properties. There's plenty to go around. I'm John Simons.