Money Management

You may be ready to try anything to get into a home in this tough market. Read on to learn what to consider when buying a foreclosed home. 

There’s one word that represents a major blow to your life and your credit if you’re a homeowner: foreclosure. If your home has gone into foreclosure, it means you’re very behind on your mortgage payments (delinquent by at least 120 days) and the lender is taking the house back from you to sell it, often at auction. It happens because your mortgage loan is secured by the home, which acts as collateral.

But what if you’re an aspiring home buyer and you have the opportunity to buy a foreclosed home? Let’s take a look at a few reasons why you might want to — and a few reasons why you might not.

Perks of buying a foreclosed home

I probably don’t have to tell you (again) that the last few years haven’t been the best time to be a home buyer. Home prices skyrocketed in 2020 and 2021, and the median price of an American home sold went from $322,600 in Q2 2020 to $467,700 in Q4 2022, as noted by the Federal Reserve Bank of St. Louis. With gains like that, you’re probably looking for ways to spend less on a home, and buying a foreclosure could offer you that opportunity.

You’ll have the chance to save money on a home if you can buy it at auction (note that you may have to make a cash offer) or even after it hasn’t sold at auction, when ownership reverts to the lender. It’s a safe bet that the home will be priced to move by that stage, as the lender will be truly motivated to get the foreclosed home off its books. It will also pay your real estate agent’s commission and could make further concessions to get the home sold. A lower price and the potential for more seller concessions than you’d otherwise get in this seller’s market sounds pretty great, right? Unfortunately, foreclosed homes come with some downsides, too.

Drawbacks of buying a foreclosed home

There are a few reasons to think twice about foreclosures. When you buy one, you’re getting it as-is, which means everything potentially dodgy about it (such as tax liens) comes to you. You might also not be able to have it inspected beforehand, and a home inspection is something you don’t ever want to skip in the course of buying a home.

Speaking of home inspections, the condition of the home could be a little rough — or worse. The former owners perhaps let routine maintenance and repairs fall to the wayside along with skipping mortgage payments, which is certainly understandable if they were experiencing a financial hardship. But less pleasantly, they (or others) may also have vandalized or looted the home, and if it’s stood empty for a long time, it could be infested with insects or rodents. Human squatters could even be living in it.

A home that is empty and unloved can deteriorate quickly. Ultimately, the money you save on the home purchase itself could end up going to repairs and making the house livable again. So a foreclosed home may not be the wonderful bargain you’re hoping for.

Proceed with caution

Your home-buying situation is personal, and buying a foreclosure could work out just fine for you. It might not be the best idea for your first-ever home purchase, though, given all the intricacies of auctions and dealing with a mortgage lender as seller, not to mention the potential pitfalls of the home itself. If you decide to look into foreclosed properties, hire a real estate agent with experience in the foreclosure market to help you, and go into the process with eyes wide open.

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A writer explains that certain Costco items aren’t worth buying in bulk. Read on to learn more. 

These days, I shop at Costco on a weekly basis, and it’s my go-to source for things like produce and dairy products. I’ve even been known to buy things like clothing and electronics at Costco.

But there are certain items I’ve purchased at Costco in the past that I have no intention of buying again. Here are three in particular.

1. Kirkland ibuprofen

Although it pains me to admit it, I’m someone who tends to turn to ibuprofen more often than I’d like to. First of all, I’m an allergy sufferer, and when conditions are brutal, I often need medicinal relief to ease a headache or a painfully scratchy throat. Plus, I have a really large, strong dog who tends to walk me rather than vice versa, which means I’m constantly straining and pulling muscles.

As such, ibuprofen is something I tend to need pretty often. And I used to buy it at Costco because the price seemed right.

The problem with Kirkland ibuprofen, though, is that it’s sold in quantities of 1,000 tablets. That’s the equivalent of 500 standard doses.

Meanwhile, I’ve found that Kirkland ibuprofen tends to come with an expiration date of roughly 12 to 18 months. Even with the higher end of that range, it’s not a lot of time to use up 500 doses. So in the past, I’ve wound up throwing a lot of those pills away. Going forward, it makes more sense for me to seek out sales at my regular supermarket or pharmacy and buy ibuprofen in smaller quantities.

2. Rotisserie chicken

You’ll often hear that Costco’s rotisserie chicken is one of the best meal deals you’ll find. But the reason I won’t buy it anymore is simple — my husband and son, who are the primary chicken eaters in my house, really don’t care for it. They’ve always preferred the rotisserie chicken I can get at my local supermarket, so even though it means a slightly higher credit card bill, I’d rather buy them a meal they’ll actually enjoy.

Plus, in recent weeks, Costco shoppers have been quick to point out that the rotisserie chicken has taken on a strange chemical taste. So I’m certainly not eager to force that on my family members.

3. Bakery bread

Since my daughters take sandwiches to school for lunch all the time, bread is something we go through a lot. But Costco’s fancier bakery bread tends to go to waste in my house.

That’s largely because my daughters prefer plain old white bread, and my son won’t touch bread with a 10-foot pole. Because bread is something I also eat sporadically, it doesn’t make sense to buy large quantities of the fancy stuff. If anything, I’m better off grabbing a small loaf from my local bakery when I have a hankering for something better than sandwich bread.

Shopping at Costco is generally an enjoyable, money-saving experience for me. And because I have an executive membership, I get to enjoy 2% cash back on any purchases I make. But I won’t be making plans to buy mass quantities of ibuprofen, rotisserie chicken, or delicious but unnecessary bakery bread anytime soon.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Given the chance to invest surplus cash, you always should, right? Keep reading to see why Suze Orman says maybe not. 

Money is tight for a lot of people right now, thanks to ongoing inflation and a volatile economy in the wake of the COVID-19 pandemic. It might seem logical to put any extra money you have toward a long-term investing strategy, as your gains could outpace inflation. The S&P 500 gained value in 40 out of the last 50 years, returning an average annualized return of 9.4%, after all.

But finance guru, author, and podcast host Suze Orman has a different take on the question of what to do with extra cash. She recently tackled a listener question on her podcast about whether an extra $10,000 per year is better applied to pay down a $400,000 mortgage loan with an interest rate of 3% or to guaranteed return investments like Treasury bills or a certificate of deposit (CD) with an interest rate of 5%. Orman is a noted fan of Treasuries, and so you might expect her to advocate for them in this instance. You’d be wrong, though.

How do mortgage loans work?

Orman noted that mortgage loans are structured so they’re front-loaded with interest payments (meaning that at the beginning of your loan term, you’ll pay more in interest than you will on the principal balance of the loan). In this way, they’re designed so that the mortgage lender makes more money off you in interest even if you decide to sell the home ahead of paying off the mortgage. You can check out your amortization schedule to see how much your payment goes toward interest versus principal.

Based on the math involved, the listener might be able to pay off their mortgage loan in 15 or 16 years (rather than 30 years) by paying $10,000 more into it per year. So they would own the home faster — but miss out on gains from investing over that same period of time. Why didn’t Orman insist that investing that money was the better choice?

The reason is psychological, emotional, and personal

Orman is always outspoken about the need for women to take care of themselves financially. The name of her podcast is Women & Money! While she acknowledged the financial variables (both known and unknown) in this particular situation, she also noted, “I know that nothing makes a woman in particular feel more secure than owning her home outright.”

So she advised the listener to consider how they would feel if they knew their home was paid for, and if something happened (such as a life-changing event that made them have to quit working, for example), they wouldn’t lose their home. As Orman also said, “The goal of money is to make you feel secure.”

What should you do in this situation?

If you are fortunate enough to have extra money coming in and wonder whether it’s better to invest or pay down your mortgage loan, there’s a few things to consider beyond just the psychological impact of having a paid-off home (which is significant).

If you’re not planning to stay in the house forever and think you’ll sell in a few years, it’s perhaps a better move to just make your mortgage payments like normal and invest the extra money. You should also consider your ability to actually invest the money and leave it be, rather than panicking and selling your investments (or cashing out your CD account when the term is up and not opening a new one). Consider your future plans and investing style when making such a decision for yourself.

But definitely don’t discount that feeling of security mentioned by Orman. The peace of mind that comes from knowing your home is paid for could be worth the lost investment gains on extra money.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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Unclaimed Baggage is a retailer that buys lost luggage from airlines and sells it to consumers. Keep reading to learn whether it’s a good deal. 

What do a gas mask, a space shuttle camera, a puppet from the 1986 film Labyrinth, and three full suits of armor have in common?

They were all found by “Unclaimed Baggage” — a retail store in Scottsboro, Alabama that sells lost luggage.

Founded in 1970, Unclaimed Baggage buys lost items from airlines — from clothing to electronics to books and games — and sells them at a deep discount at its physical and online store.

Most items are discounted 50% to 80% off their estimated retail prices, with some clearance items seeing price reductions up to 95%.

The company buys what represents around 0.03% of all lost baggage at airports — “orphaned luggage,” or luggage that remains unclaimed for 90 days. According to the company itself, it stocks its store with roughly 7,000 items per day, which consumers can buy in person or online.

What can you buy?

Anything that can fit into a suitcase, such as clothes, electronics, shoes, toys, golf clubs, and books. Also: the suitcase itself (they have a ton of suitcases).

To see what the retailer has right now, you can navigate to their website and browse items by categories: “New Arrivals,” “Women,” “Men,” “Children,” “Shoes,” and “Lifestyle & Electronics.” The website has an easy-to-use interface and allows you to narrow searches by price, brand, color, size, and condition.

For example, some of the items I’ve seen recently include:

Apple Airpods 3rd generationFerragamo moccasins14k gold diamond tennis line braceletGucci ankle boots13″ 2020 Macbook AirBuffet Crampon student clarinet set

What condition are items in?

Unclaimed Baggage says it professionally washes clothing, tests electronics, and appraises jewelry before items hit the shelves. Judging from its online store, most items appear gently used, with those in worse condition advertised as such.

That said, some former shoppers and Reddit users have complained about the quality of clothing, noting that some clothes had stains, worn-out seams, rips, and “unique” smells.

The company has a return policy of 14 days on all products that aren’t marked for final sale. Note: the item must have its original tag and in its package (if it had one) to be returned

Is it better to shop in person?

If you can find your way to Scottsboro, Alabama, then, yes, you would probably have a better experience shopping in person.

For one, you can avoid paying shipping charges, as well as judge items in person rather than by a photo. You can also be the first to check out new items that have been recently stocked but haven’t been registered online.

The Unclaimed Baggage store also has a daily “Baggage Experience” event, which allows shoppers to open unprocessed luggage and see what’s inside. You might even get to keep some of the items you find!

What are some of the strangest items it found?

The retailer has reportedly found some bizarre and rare items, ranging from a $64,000 presidential platinum Rolex (sold for $32,000) to a 40.95-carat Colombian emerald appraised at $25,000 (sold for $17,000) to shrunken heads and French newspapers from the 1930s.

A few other unique finds that have found their way to Unclaimed Baggage:

Aluminized fire suit10-foot long dung chen from TibetEgyptian burial maskVictorian “flirting fan” from the 1800sA “live” rattlesnake (no joke!)

When is the best time to shop at Unclaimed Baggage?

The retailer introduces new items online on Thursdays and Sundays. So, if you don’t find what you’re looking for today, you might get lucky and find it as a new item on those days.

You could be strategic, too, and check the store 90 days after holidays or periods when airline traffic is heavy. For instance, April might be a great month to shop for luggage that was lost over the Christmas travel season, as the 90-day waiting period has ended and airlines can now sell lost luggage to the store.

As far as how to buy lost items, I would recommend a cash back credit card that earns more for Google Pay, which is one of two digital wallets that Unclaimed Baggage accepts online (the other is Shop Pay). If you’re trying to snag a sign-up bonus on a rewards card, you could also charge purchases to help you reach the required spending milestone.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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