Foreclosures In Charleston SC: Advice For Buyers
This post is for anyone searching for foreclosures in Charleston SC. First, I will give some numbers, but I will also give some tips when buying a foreclosure home.
A few years ago foreclosures were a hot item. It seemed as though everyone was looking for them.
It was popular for real estate companies and realtors to offer a “free list of foreclosure homes” because they were in demand.
Today, there isn’t the same demand for them. However, there are still people searching for them.
There is a perception that the banks do not want these properties (which is true) and that they will simply give these homes away at a price well below market (not entirely true).
The number of distress sales have dropped over the years. These homes include short sales as well as foreclosures.
After the real estate bubble burst, the market was flooded with short sales and foreclosures.
Part of what lead to the market crash was the banks and lenders loosening their lending guidelines too much.
Quite frankly, many people were able to get mortgages that probably shouldn’t have in the first place.
Loans existed that required no money down, only required interest only payments, and loans that didn’t require much, if any, documentation to prove income.
This fueled tremendous growth in the real estate market, but it also lead to the crash.
As a result, home values plummeted. Combined with the Great Recession, many people were no longer able to afford the payments on their homes.
Other home owners found the need to sell, only to be in the position of owing more on their homes than they were worth.
This is what is known as being “upside down” or “under water”.
These home owners either stopped paying on what they could no longer afford, or negotiated with the bank to short sale their home–sell the home for less than what is owed.
However, fast forward to today, and you don’t see as many distressed sales.
Many homeowners that purchased during the peak years have seen their home values increase back to above what they owe.
Most of the people that couldn’t afford their homes anymore (and were subject to foreclosure) have long since walked away.
You can see in the graph below just how much distressed sales have declined over the last few years (this is the national numbers):
The next graph also shows that many more home owners are no longer under water, and there is just a small percentage of home owners that cannot sell their home (unless they do a short sale) because of a negative equity situation.
That said, foreclosures will never go away completely.
There will always be foreclosures on the market, but they are no longer a larger percentage of homes for sale.
Here is a quick look at the number of foreclosures in Charleston SC over the last few years.
For May, foreclosures in Charleston SC made up 69 of the 1,465 total homes sold. That is just 4.7% of all Closed Sales in the Charleston MLS.
By comparison, June of 2012 saw 173 foreclosed homes sold out of the 1,059 total Closed Sales. That is 16.33% of all Closed Sales.
Foreclosures spiked in March this year, accounting for 123 of the 1,434 total Closed Sales. But that only made up 8.6% of total sales.
Foreclosures In Charleston SC: Are They Worth Buying?
Buying a foreclosure isn’t necessarily a good idea for buyers, especially first time home buyers.
There are exceptions to the rule, but they are not always the great deal people think they are.
First, let’s dispel the myth that foreclosures are such a great deal. Will they be priced below market? Yes, usually. But why?
Chances are, if a foreclosure is priced below the market it is because there are issues with the home.
If the previous owner couldn’t afford to make their house payments, then chances are they didn’t have the money to properly maintain the home.
Routine repairs were probably ignored, and there was likely an issue or two they also ignored.
The older the house, the more likely that there are some issues with it. Probably bigger, more expensive issues.
There are some issues you can see, such as a leak in the roof. However, there are many things you can’t see.
And don’t expect the bank to know either. They do not perform any inspections, nor do they do any repairs.
You will see that foreclosures are advertised “sold as is, seller to do no repairs”. Once the bank takes the house back, they do not inspect or repair anything.
The power will also usually be off at a foreclosure. This can make it tough to know whether the heating and air conditioner work properly (or at all).
It is also not uncommon for a foreclosure home to be outdated, and they are usually trashed to a certain extent.
The previous owner probably was not happy about losing their home, and it is common for them to punch holes in the walls, kick in doors and just leave the home trashed on the way out.
While foreclosures are sold as is, the bank will let you perform an inspection.
If the inspection reveals too many issues, they will allow the buyer to back out in most cases.
However, inspections can run $300-$40o, so be prepared to lose that if you decide to make an offer on a foreclosure.
Because the homes are often in bad shape, they will be discounted. But if a home is listed at $40,000 below fair market value, odds are that it needs close to $40,000 just to make it habitable again.
While the banks do not want to own homes and are eager to get rid of the property, they will not simply give the house away.
After all, banks are in the business of making money, not losing it.
Is it possible to find a foreclosure home that isn’t in need of a lot of repairs? Absolutely.
Over the years I have seen some scary looking homes, but I have also seen foreclosures that only needed some cosmetic updating.
I’ve even seen a couple foreclosures that were pretty much move in ready. However, that is not the norm.
In the current Charleston SC real estate market, buyer demand exceeds the supply of homes for sale.
Good homes do not last long on this market, and they often get into a multiple offer situation.
If there is a foreclosure in pretty good shape priced at or below market, it won’t last but a couple of days and will likely receive multiple offers. This creates a bidding war.
Finding a home in the Charleston SC real estate market is hard enough for buyers today. Finding a home before other buyers offer is another challenge.
Can you find a good deal on a foreclosure? Maybe, but don’t enter the market dead set on finding a steal by buying a foreclosure.
Whether you are looking at buying foreclosures in Charleston SC, or just simply looking at Charleston houses, it is important to use the right Realtor. One that can explain the process to you and answer all your questions.
Your agent needs to work hard for you from the start–not just once you have found the perfect home.
See why I am the right agent to help you in your home search.
You can learn more to make your home search easier, and you can have listings that match your exact criteria sent to you.
If you want, you can even get a free list of foreclosures in Charleston SC by visiting my Pam Marshall Realtor website.