Featured News 2016 Do Banks Fix-Up Foreclosed Homes?

Do Banks Fix-Up Foreclosed Homes?

Many house hunters won't even consider buying a foreclosure out of fear of encountering holes in walls, stained carpeting, overgrown yards, and other destruction caused by former homeowners who were angry about losing their homes.

Skeptical homebuyers may want to reconsider foreclosures, especially since some banks are investing a little money into foreclosures to spruce them up and attract buyers. If the conditions are right, a bank may invest in new paint, carpets and appliances if it means selling a house.

When the Circumstances are Right

In recent years, more banks have been willing to put money into foreclosures to attract buyers – when the circumstances make financial sense. This does not mean that every bank is willing to renovate each house.

Banks are for-profit companies and they are concerned about the bottom line. If fixing up a house will price it out of the market, the bank probably won't do it. Usually, the bank will take a look at how much it will cost to make the repairs and how much they would increase the property's value.

At a minimum, listing brokers are usually required to ensure that a property is safe, and that the yard is cleared of debris. If the home is seriously damaged, there is only so much a bank will do to fix-up a property.

A bank doesn't want to make cosmetic improvements only to conceal other issues.

Some lenders, such as Wells Fargo have fixed up quite a few properties in recent years, whereas others will not do any renovations, even though doing so would increase the home's marketability.

The homes that are most likely to be renovated are the higher priced homes that do not attract cash buyers. Why? Because, new lenders often require repairs before underwriting a loan.

If a home needs substantial repairs, the bank won't usually be interested in forking over the cash. Instead, they will sell the property "as is."

If you are interested in buying a foreclosure, contact a real estate lawyer for advice!

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