With record numbers of homes going into foreclosure, some prospective buyers see opportunity. John Laing Homes, the Irvine-based builder, wants those people to know what they’re up against.
“A foreclosure may appear to offer the best deal on a home, but there are numerous hidden costs,” the company said in a press release. “A foreclosed house is sold ‘as-is.’ At times there will be a lot of time and skill involved to undertake major renovations as well as financial costs, which should be considered if you value your leisure time.”
A homebuilder such as John Laing Homes, which has several Orange County communities for sale, obviously has an incentive to discourage potential customers from buying foreclosures. Why should anybody listen?
Linda Mamet, the builder’s vice president for sales and marketing in Southern California, explains that “more and more customers are asking us about the process of buying foreclosed homes. … Often, they come back three months later and they’re saying I’m ready to buy a new home.
“They are hearing things that may or may not be true about what price a foreclosed home is really being sold for. And it can sound very appealing…but as they get into the process and find out how the process works — just because you’ve been in an auction doesn’t mean the bank will sell the house to you.
“Mostly they found it a very frustrating process because they’ve looked at many homes, often not in good condition. (Some have) waited many months to even hear back whether their offer would be accepted. Sometimes they were told they had the winning offer and then find out the bank has decided not to sell the property.”
Why put out a press release? “What I would say to that is that anybody making a decision about the biggest purchase of their lives should be well informed,” Mamet said. “You should know about the pros and cons of buying a foreclosed home or even a new home.”
John Laing Homes’ press release also offers advice on short sales:
“A short sale is in the pre-foreclosure process, meaning the bank has given the owner a limited amount of time to sell before repossessing it. This often results in complicated negotiations with both the owner and one or more banks. It can take up to six months just to get a response to an offer. Homeshoppers taking this route should get ready for three-way haggling, lots of waiting, and possibly no home.”
Mamet said that when customers say they’re thinking of buying a foreclosure, “we would print things off MLS so they can understand the difference in location, difference in value, difference in condition of the property so that you can make an apples to apples comparison.
“It’s good advice for people to go and look at alternatives and choices, but to carefully evaluate it and look at the pros and the cons before they make a final decision,” she said.
Ultimately, the foreclosure route isn’t right for many home shoppers, she said.
Are there any shoppers for whom foreclosures are a good fit?
“I think that often times that people who are satisfied with their experience in buying a foreclosed home are looking at it as an investment property,” she said. “Looking to rent it. Not as a personal primary residence.
“There’s more of an emotional attachment to a property if you’re going to be living there for the next five to 10 years. If you’ve got your heart set on this and you’re thinking about the neighborhood you’re going to be living in and where your children are going to school and then to find out three or four months later that you’re not going to get the home, that’s a disappointing experience. And there may be more costs than what you thought of up front.”
Related posts:
- O.C. early foreclosure notices drop for second month
- Anaheim company sues Ed McMahon over mortgage
- Long Beach congresswoman can get foreclosed house back
- Mapping foreclosures in O.C.
- Foreclosure threat spreads in O.C.
Do people really go into the sales offices at new developments and ask the staff about the process of buying a foreclosure somewhere else? And how many of those people actually return to that same office three months later and buy a new home? Why does it take them three months to return, I wonder?
A friend once told me she could never consider living in a “used” house. At the time, she was living in her second new home, and was looking to trade up to a third. Maybe Laing could turn that into a sales pitch, as well, comparing their shiny new homes to a broken down house leaking oil all over its decent sized lot.
Things are really bad when the competition for new homes are foreclosures……
How come these builders weren’t warning people that they were buying shody contructed homes in a time of a speculative bubble a couple years ago?
builders are greedy guys
dont listen to their scary ideas
Linda,
Is this your way of soliciting customers? You must be hitting rock bottom over there. Let us know if it works so I can send out a press release too.
Distressed properties account for 40% of the sales activity right now in OC . The reason for that is that banks are more realistic about the pricing their properties than individuals. Considering this, a potential buyer should consider distressed properties, or otherwise risk substantially overpaying. And evidently, since distressed sales account for 40% of the activity, buying such properties can’t be too much of a hassle.
‘Fo Real
poor linda…
We also want you to know what you are up against to buy a new homes from Builders:
These new houses are too expensive. Like new car, you probably enjoy the ownership of new houses for few weeks, but price is too high.
Watch out for hidden costs and read a small prints. Do not let new house becomes your nightmares to come.
To be competitive, Builders reduce price. As a result, quality is really bad. They will cut every corners.
As soon as you move in, it is forever to wait for Builders to fix up.
It costs much more to add things around new houses because it comes with basic package.
New house will come with many additional costs you have to bear for the next 10 years.
As always, buying house is a worst investment at this point. Save as much as you can.
Ha Ha Ha, Buying a new McMansion is like buying a Chrysler (the new Edsel to you young folks). The material used to construct new homes is junk and the workers are almost all, ahem, immigrants working at minimum wage or less. Good luck in a lawsuit against a new home builder or their (where’d they go) insurance company. Just say no to any home purchase for a few years. Real Estate is Over.
Most of the homes built in Laguna Niguel during the boom in the 80’s had major issues. Some of them slid down the hill onto a condo complex. Other neighborhoods continue to have foundation issues due to poor grading. I would not touch a home built in this last crazy boom with a 100-foot pole!
WHAT A CRACK UP…A NEW HOME BUILDER COMPARING THEIR PRICES AND ILLEGALY HIRED AND RESIDING LABOR COMPARING THEIR HOMES TO ONES DISCOUNTED SOMETIMES UP TO 50%
MAYBE WE SHOULD CALL IMMIGRATION THE NEXT TIME WE SEE A JOHN LAING HOME GOING UP…..I DONT THINK SHE WILL BE MADE AVAILABLE FOR ANYMORE ARTICLES BOYS AND GIRLS…..
The article sounds a lot like the realty websites that keep calling a bottom to the falling housing prices.
Let’s not forget about the hidden cost of past due property taxes for the foreclosed properties. Chances are if they couldn’t pay their mortgage, they couldn’t or simply ignored their property taxes. I would hope realtor had to disclose this, but I’m not sure I’d rely on the realtor. Check out the tax assessor’s website: http://www.tax.ocgov.com and do your research.