Should I Buy in a Building with Foreclosed Units?

Well, the Fed made another major rate cut as part of their emergency action procedures to battle the current market conditions.  What does this mean for current owners and aspiring buyers?  We keep hearing that it is a buyer’s market.  It kind of depends who is saying it...if it is a real estate agent telling you this, make sure you have all the facts and your personal finances in order before doing anything.  In all honesty though, they are right.  There are many good opportunities for long term buyer/owners.

One major shockwave rippling through the housing industry is the ever increasing rate of foreclosures...especially on condos.  Condo foreclosures are at an all time high and it can have a direct impact on other owners living in the same building.  Buyers are there looking for great deals, but are concerned about the effects of foreclosures in buildings they are interested in.  Even for the long term thinkers, condo foreclosures can have an impact on current owners.

Here is what to consider: (1) Anytime that condos are foreclosed on in a give building there is a direct financial burden placed on that building and its association.  Keep in mind that condo owners are paying for housing association fees and other expenses that are put in place to help run operating expenses and keep common areas in good condition.  When that money is not paid by owners that are foreclosed on by the bank, the association must make necessary adjustments.  This usually means that current condo owners have to pay their pro-rata share of the increased expenses; and (2) the longer these expenses accrue and current owners have to keep footing the bill for those who default on payments, the more likely it will have a negative impact on values.