Boston Home Improvement Blog

Are Boston-area foreclosures worth buying?

The news is littered with stories about foreclosures. Opportunities are popping up everywhere, from Framingham to Fitchburg to Cambridge, to buy a foreclosed home. Here in my metroWest town an intriguing property appeared on Trulia, right down the street. An 1800 square foot home on a half acre in the $240K range.

No, it's not 1997, and it's not in a high-crime neighborhood. It's a foreclosure, with significant damage. Home buyers in the Boston area are not just looking at foreclosures to find a good home deal. They're taking coach bus tours to view foreclosures:

Srikanth Madarapu had his sights set on a Northborough home: a 3,000-square-foot contemporary Colonial priced at $439,900, yet assessed at $570,500. The house offered good curb appeal and seemed to be a phenomenal deal.

Until he walked inside. The foreclosed home was missing its kitchen. There were some appliances, but where you would expect to see cabinets and countertops, there was just empty space - ghosts of the growing national foreclosure crisis.

Madarapu was one of about two dozen potential buyers who paid Marlborough-based DCU Realty - $20 for members of its affiliated Digital Federal Credit Union, $25 for nonmembers - for a bus tour of foreclosed homes on a recent Saturday morning.

With stops in Northborough, Shrewsbury, and Westborough, the sold-out tour offered both modest and impressive homes in varying stages of disarray: torn up floors, overgrown yards, and water damage. Several were obviously in the midst of renovations when the cash ran out.

Is it worth buying a foreclosure that requires significant renovations? What about buying a home that was being renovated and the money ran out, or the owner died? Taking over a home with incomplete renovations carries significant risk. But it can also bring a big payoff if the home is priced below, and sometimes well below, market value.

The foreclosure trend isn't showing signs of ending anytime soon, and sites such as Foreclosure.com even let you see which of your neighbors are in pre-foreclosure. Home sellers in pre-foreclosure may be more likely to take a low ball price in an effort to salvage their credit, and yet the burden of the loss they incur may be greater than the burden of a foreclosure on their credit report. Pre-foreclosure may slip into foreclosure depending on each homeowner's individual situation.

There are few generalizations when it comes to the real estate market these days. Home appraisers become more valuable when assessing a foreclosure, as do home inspectors. A good general contractor can come in and give estimates for work needed to overhaul a foreclosure with damage. Finding the right professionals to help guide you through a Boston-area foreclosure can help to decrease risk, but you can't eliminate it completely.

Posted by Melanie Zoltan
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