Foreclosures can mean low purchase prices and good profits on resales.  That’s something to get excited about!  There are some Hilton Head foreclosures right now but how do you find them?   There are foreclosure services that charge a fee to display foreclosures in your area of interest (not necessarily an up to date list) and also provide the e-mail addresses of the agents who have the foreclosures.  This can be helpful but it is not necessary.  It is definitely not the best way to buy real estate.  In my opinion, the best way to buy real estate, including foreclosures, preforeclosures and distressed  properties is to search the Hilton Head Multiple Listing Service for the property you want and work with a Buyer’s Agent.  All of these properties and more are listed with the Hilton Head Multiple Listing Service.  You can search all available MLS listings at any time or you can ask your Agent to do it for you.  True, the MLS does not categorize listings as  foreclosures, preforeclosures or distressed, but this information is given in every listing.       

I have owned Hilton Head foreclosures that have been great deals but I can assure you that that just because a property is a foreclosure, it is not automatically your best buy.  Price is important but so are location, quality and use.  I’ll come back to this, but first let’s define the kinds of properties that can be bargains:         

• Distressed properties have owners who must sell for a variety of reasons.  This does not mean that the property itself is ‘run down’ but it could be.  The properties are listed in the Hilton Head Multiple Listing Service and priced as low as possible for a quick sale.        
• Preforeclosures have owners who have missed some bank payments.  Many owners who bought at the ‘top’ and saw their adjustable payments increase also saw market prices fall.  It’s a real problem when an owner cannot afford their payments but cannot take a loss.  Preforeclosures are an urgent selling situation and they are always listed with the Hilton Head Multiple Listing Service at the lowest  possible price to optimize a fast sale.  The sale of a preforeclosure is often be accompanied by a negotiation with the lender to restructure or forgive the seller’s debt that exceeds the purchase price and closing costs. 
• Foreclosures are properties owned by banks after they have have bought them on the courthouse steps.  This is because the owner defaulted on their loan and the bank has bought the property to protect their investment.  Banks list their properties (called REOs for real estate owned) with agents of the Hilton Head Multiple Listing Service.  A foreclosure is typically listed among the lowest prices on the market but not always.  It depends on the mortgage balance the the willingness of the bank to take a loss.  
• Properties with eager sellers are worth noting even though they may not be distressed at all but some sellers can beat the market if they want and still make a good profit.   I have been to auctions where some of the properties sold for more than listed properties with the MLS.  Had the buyers checked out the listings they could have bought for less and with better terms.   

Here are some reasons why foreclosures and distressed properties may not be your best deal: 

1) Foreclosures and distressed properties don’t always have the lowest prices.  The price is dependent on the sellers ability and willingness to take a loss and this includes banks.  When a bank tries to recover a high mortgage balance, attorney fees and other closing costs, whey may not offer the lowest price on the market.   

2)  The location of the property may not be the best for your intended use.  Compare the location of similar properties to see if what you really want is worth the premium.     

3) The condition of the property may be a problem.  The owners of distressed properties often don’t have the money to maintain or improve their properties.  Even when they sell their properties, they may not be able to pay for needed repairs as part of the sale.  Foreclosures are always sold ‘as is’.  This means that you must purchase with the right of inspection and even then, you will be paying cash for the repairs unless your lender will finance them with the purchase.

4) Other concessions you want may be refused.  In a standard purchase, many concessions are negotiable.  With foreclosures and distressed properties, a buyer may be refused concessions that include repairs but also they can include improvements, closing costs, assessments, regime fees and taxes as negotiated and allowed by the lender.  

5) Taxes go with the property so you want to make sure that they are paid at closing and that you are not buying a property and also a tax debt or some other lien that must be satisfied on sale.   

For any property you  want, you are wise to have an experienced Buyer’s Agent represent you.  Keep in mind that the listing agent of foreclosures and distressed properties represents the seller, just like with any other property.  You will benefit from an experienced agent’s opinion about the suitability of the property for your needs.  Your agent can compare the subject property to similar properties on the market and others that have sold.  Good agents earn their commissions with their skills and knowledge that save your time and money.  They are paid at closing by a commission that is already in the price of every listed property.  All things considered, it’s a no-brainer to have a good Buyer’s Agent working for you.       

To search and purchase any Island property, please call on me.  Remember, foreclosures are not the only good deals out there.  Nobody should overpay but sometimes quality and location are worth a premium.  This is a great time for a buyer to be in the Hilton Head real estate market.  Foreclosures and distressed properties are among today’s opportunities.         

Richard Kadesch, Owner and Broker-in-Charge The Gated Community Specialist ® Go Gated Realty ® Hilton Head Island, South Carolina Rich@rkrealty.com www.GoGated.com 1-800-333-5025 Read Some of My Clients’ Success Stories