In 2013, foreclosed homes dropped 26 percent national wide. But despite the drop more than nine million properties across the country are still facing foreclosure.
Sioux Falls is not immune to the threat.
Every year, hundreds of homes in the area undergo the foreclosure process and end up on the market, often at a list price well below normal market value.
While the price tag may look like a bargain, you should know exactly what you're getting into before considering a foreclosed home.
"The biggest thing for me when I am trying to help someone buy a foreclosure that they are patient and that they know there will be loopholes and politics that we have to go through," Stefanie Stockberger, a Re/Max realtor in Sioux Falls, said.
One hoop can be finding a mortgage lender that will help you purchase a foreclosure.
"The main thing is when you're buying a foreclosure you're buying it as is. And not all loan programs will allow you to buy the house if there are certain problems with it, with the property itself, and so a lot of those loan programs you can't do. You're kicked out of it. So it has to be the right borrower and the right type of program for it," said Kevin Carlson with Plains Commerce Bank.
If you can find a loan that works for you, it may not be a traditional mortgage process.
"The main thing that we see is that it takes a little longer to do. There's usually a week up front that gets burned while we are waiting for the foreclosure company to give us their ok and then at the end we have to let them look over the closing documents for another week. What may normally take a month I would give it about forty five days," said Carlson.
Once you've jumped through the additional paper trail and waiting period a foreclosure requires, the truly daunting task begins.
"The process says you buy it ‘as is' so you're buying something that you get an inspection on but it's truly knowing that your going to have to go in and fix up some things," said Stockberger.
But on top of the issues identified during the inspection, there will likely be a running list of additional repairs required to get the house up and running again. Depending on the condition of the foreclosed home, that list of repairs can be even more expensive.
"I have seen cement in toilets, the house is ripped up like the light fixtures will be off. All the appliances will be out of there. There will be writing on the walls," said Stockberger.
"Two story houses, maybe water lines broken up stairs, water going through the two floors to get to the basement, there's sheet rock removal, it can end up in the thousands and thousands of dollars," said Glen Greenfield with 3-D Plumbing.
"Especially in the winter time like this, there is no one living in the house and a lot of times pipes freeze and that stuff just takes time to get worked out," said Carlson.
Sometimes those repairs costs can outweigh the discounted price.
"It's not necessarily going to be an extremely better deal just because it's a foreclosure," said Carlson.
"Know that realistically it's not going to be a half price sale by any means but you are going to most likely gain some equity instantly as long as you are able to do a little bit of work and some TLC on the home," said Stockberger.
But after investing your time and money into a foreclosed house, it could turn out to be the home of your dreams.
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