When a homeowner defaults on his mortgage payment, the lender has the right to take over the house and sell it to realize the debt. This process is known as foreclosure and in a depressed property market; foreclosed properties often present attractive opportunities to buy homes at affordable prices. Because of the depressed economic conditions are there has been a wave of foreclosures and foreclosure notices issued in the year 2008 number some 3 million. Here are some of the reasons you should carefully consider buying a foreclosed property if you are looking for a home buy:
Low prices: foreclosures are almost always available at a discount to their market price. Discounts of 30 to 50 are not unheard of but the usual discounts are in the more modest range of 5 to 10 . The lenders know the market prices as well as anybody is but can be persuaded to let the properties go slightly below market if a quick deal is in the offing.
great home flipping opportunities: if the homeowner has not had the money to meet his mortgage payments when leading to the foreclosure, the chances are that he would not have had the money to carry out routine maintenance and repairs to the house. This is one reason why you may be able to obtain the house at a discount. If you are then willing to spend some time, effort and money in doing up the house, you may well be able to resell it at a quick profit
Immediate availability: most lenders will ensure that after foreclosure, the home is empty before they put it on the market. It is therefore immediately available to a buyer who can move in without any delay...
Better terms: most lenders are in a hurry to sell off foreclosed properties and will give you a good deal simply to expedite the sale process. You may be able to get away with lower closing costs, a lower down payment, and better financing terms and so on. You may also be able to get a good deal on other costs associated with buying a home such as legal expenses and fees.
Attractive financing: if you have a decent credit history and a good credit score, the banks or lenders selling the foreclosed property will bend over backwards in offering you flexible and attractive financing for the property.
Building an investment portfolio: if you are looking all investment opportunities and have the cash and the financing to invest, foreclosed properties present and unprecedented opportunity to build up a portfolio of income properties at a reasonable price.
If foreclosed properties are such a great deal, why isn t everyone jumping on the bandwagon? This is because investing in foreclosed properties can present problems but with a little preparation and knowledge, there is nothing that you can t handle. Clearly you will need to balance the pros and cons and decide whether the risk is worth taking. If you are thinking of a sizable investment, it might be a good idea to get a professional with experience in foreclosed properties involved. You will then obtain expert guidance on the procedures involved and the pitfalls to be avoided.
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