The Pros and Cons of Buying a Foreclosed Home In Evergreen

A foreclosed home is a home that has gone through foreclosure. Foreclosure is the legal process in which a lender repossesses a property from someone who has defaulted on their loan, usually due to failing to make their mortgage payments. Buyers buy foreclosed homes from the Jefferson County Public Trustee. The Public Trustee is a county official who is responsible for managing foreclosures. When a property goes into foreclosure, the Public Trustee will sell the property at auction. Buyers can attend the auction and bid on the property. The highest bidder will win the property and become the new owner—sometimes at a great discount from the market value. While the market in Evergreen has been so hot for the last few years there have been almost no foreclosures. Most owners have built a sizable amount of equity and there's almost always a handful of buyers waiting to purchase if someone is running into a forced sale situation.  However, as the market transitions to a more balanced playing field between buyers and sellers the likelihood of foreclosures increases.  Especially in homes that need substantial work or have other issues.  There is risk in purchasing a foreclosed property however; check out the following pros and cons to decide if it’s worth the potential reward for you.

Pro: lower price

When a bank takes a property through the foreclosure process, they may want to sell it quickly to recoup their costs. These can include the unpaid balance of the loan, outstanding property taxes, the costs of the real estate transaction, and any remaining liens they had to pay off. Since they frequently want to do this as rapidly as possible, you can usually buy a foreclosed home at a lower price than homes in the surrounding area.

Foreclosed homes are also cheaper because they are not typically in turn-key condition. They need repairs—sometimes major—-and they’re sold “as-is,” meaning that the bank is not going to make improvements to the property for you before you buy it or move in. This does mean that you can snatch up a foreclosed home at a lower price than a similar home in perfect condition, but you should be prepared for the cost of repairing and renovating it.

Pro: potential for investment

Because of the condition and lower price, the potential for return on your investment with a foreclosed home can be high. They’re a popular option with experienced home flippers who can buy a foreclosed home at a discounted price, make the necessary repairs and updates, and then sell for a profit. Just make sure that if you’re planning to do this, you get a thorough and detailed home inspection in addition to contractor estimates on the cost of repairs before you buy. This will help ensure that you don't walk into a money pit it and doesn’t end up costing more than you can get out of it when you sell.

Con: bargaining power and concessions

With a foreclosed property, you likely will have no bargaining power and no chance of getting concessions on the terms.  In fact, many homes in the Jefferson County foreclosure process don't even have access for showings--as in none!  I've heard stories from the last real estate bust (2010ish) when people would have to sneak into foreclosed homes to try to determine the condition.  Obviously, this would be trespassing and I wouldn't recommend it.  

Con:  timeframe

Foreclosures in Evergreen are managed through Jefferson County.  According to the Jeffco foreclosure web site at:

Jeffco Foreclosure process....

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A foreclosure is commenced when a Notice of Election and Demand is recorded in the County Real Estate Records after the Public Trustee receives the required documentation from the foreclosing party or their legal advisor. Foreclosure notices are mailed to all parties as required by law. See the requirements in our Attorney section: required documents by the foreclosing attorney.

The Combined Notice, which establishes the time and place of sale, is published for five consecutive weeks. Currently, foreclosures are published in the Canyon Courier, Golden Transcript, High Timber Times, Wheat Ridge Transcript and The Denver Post. It is important to note that the property owner owns the property through the sale and is the only person who can allow access, sell or transfer title to the property.

Foreclosure sales may be tracked through the Jefferson County Public Trustee's Office Foreclosure Property Search.

Con: home condition

Foreclosed homes are typically not in great condition, and here’s why. If a bank is foreclosing on a house, it’s generally because the owner has not made their mortgage payments for an extended period of time. If someone is in a situation where they’re unable to make their mortgage payments, they usually also don’t have the time, energy, and money to spend on home maintenance and repair either. Homes tend to fall into disrepair before foreclosure is final, especially once the process has started and the owner knows the home will no longer be theirs. When they leave, they may not always be able to take all their belongings with them, which means that you could end up buying a home full of furniture, clothing, food, and even trash that you’ll have to dispose of later.

Additionally, once the owner has vacated the property, it will likely sit empty for a period of time before you purchase it. This opens the home up to squatting and vandalism, which can further deteriorate the condition of the home. For this reason, it’s important to get thorough inspections and repair estimates before you buy.