Is Buying A Foreclosure A Good Idea?

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[Gus_Chiggins]

Hi Dave, we bought a house, my question is should we buy a house?

[ScottBussing]

Congratulations 🎉. You saved up $148, 000 plus a fully funded emergency fund and paid cash for a house in your early 30’s. I’m very impressed. Your father is a carpenter and a contractor. Yes, you have some risk. But the upside is huge! Fear is very natural. Breath in, breath out and grab a paint brush. Chances are that you can do it.

[DanHerbruger]

These guys are champs!!! Love how they saved 148k on a 60k income. A lot of people making over 100k have no savings.

[Hannahbenowitz]

This Housing market collapse might end up being a part of us for a very long time. With inflation currently at about 9%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.

[SmoothJK]

Fun fact: This caller lives underwater.

[oneeyedman]

Before buying a house she needs to spend some money on a better cell phone provider.

[justinacase]

My first home was a foreclosure. Needed work but at 45% below market value, I knew I could fix it and still come out pretty good. A remodel of a home is a true marriage test!

[Barweezy]

For those of you wondering, the answer is no.

[bobmarker]

She might not have much of a clue as to the cost of a rehab, but gotta give them credit for saving so well.

[organicvids]

Move into house immediately. Use saved rent monies to repair home room by room. Forego hvac until later, install mini splits as affordable. Always better to own than rent.

[christianyork]

3:14
Dave: "Is the roof good?"
Caller: "I think so."
Dave: *cringe*

[rollingacresfarmstead]

we did back in 13, had been sitting for 3 years. needed a ton of work 7 years later after sweat labor its done. bought for 122 put 40 cash into it worth 275-300 now will be paid off in 3 years

[MindfulOfTheBear]

I am a 26-year-old college student I bought a HUD foreclosure in June. For about 10, 000 LOL three-bedroom 1-bath 3049 square feet. I started having remorse because, to be honest, I would probably have to spend $10, 000 to fix up the house. But in reality, that's a steal. For a house that doesn't look like it was destroyed and a lot of this is just cosmetic. Repairs include an Electric roof the has minor damage. But it was a steal

[TheJonOrtiz]

These people are in a good spot. Way more positives than negatives. Dave should be giving ideas and congratulations

[wtDrake]

Sounds like buyer's remorse and looking for Dave's reaffirmation

[joshtroyer]

First of all congratulations to you caller! You worked very hard to save up and pay cash for this house. Second of all Dave! Although I appreciate most of your content. Give her a break! They just hand it over all their life savings. Of course they are going to be nervous. This was not their 50th property. Help them relax! Yes you're going to be scared to death when you're young and just hand it over your whole life savings. Tell them they're going to be okay.

[ca]

Questions:
Is this your first house?
Do you own any tools whatsoever?
Can you do basic electrical, carpentry, plumbing, tile and sheetrock repairs?
Have you calculated your monthly utilities/taxes and insurance? If so, what will it cost per month to live there?
...

[ItsEricAZ]

I'm a Realtor in the Phoenix area and I have dealt with some HUD, foreclosured/REO & short sale homes. The big problem from what I've seen is buyers over estimate their ability to fix things, under estimate the money needed to get her done, and especially to underestimate the time it takes to get it done. ALWAYS assume it'll cost more, take more time & energy than you think by 10% to 35%.

With HUD homes & some REOs a big problem is when you can NOT turn on water. electric or gas for the inspections. In one case the buyers got lucky and nothing major was wrong and they ended up getting a pretty good deal at taxpayers expense. On a second case, there were some unknown issues that were expensive to fix after closing and HUD doesn't care as you bought it as is. HUD is very dense and difficult to work with, while most banks are just slightly better so do not be surprised by their heavy bureaucratic processes.

Foreclosures are houses owned by the bank and short sales are those still owned by the owners and they are working with the bank to sell the home for less than the mortgage amount (rarer these days with rising home values). In both cases there typically is a fair amount of deferred maintenance and/or damages to the property. Take your time and write down all of the known issues and estimate time and cost to fix them up. Again, add in 10% or more as a cushion for things going wrong & taking more time, or contractors can't show up for a week do to missing supplies or because they ran behind on prior project.


These can be good deals when you are extra careful and diligent in your expectations.

[sharonkeller]

Since this was two years ago, I would love to hear how it came out. I'm not a fan of Ramsey but I was intrigued to know what happened to this couple and their house. Sounded like a great decision!

[christhomas]

Get the necessary repairs done so the house can be insured (for a mortgage). Then put a mortgage on it to pull the money that you need back out. You'll have a house, money in the bank, and small mortgage payment. Then get the mortgage paid off.

Don't overthink this, it is called analysis paralysis. Just get it done and move on.