Reports state that foreclosures will account for 1% of all homes this year, the highest it’s been in 52 years. While we could comment on the reason for the increase in foreclosures, we’re more interested in how to reap benefits from this new housing trend.
Foreclosed homes can be a bargain basement purchase, either for a potential rental, resale or even personal accommodations. There are however a few aspects to be aware of.
Federally seized property such as those on FHA or VA loans are more likely to come with low downpayments and possibly repair allowances. Banks typically have a department solely to deal with confiscated properties where owners have defaulted on their loans.
Sometimes the properties will be placed up for auction, but then priced at their appraised value which is no bargain for the buyer. Some institutions will sell for the remaining amount of the outstanding loan, which again, has the potential to be nearly the full purchase price of the house.
The best way to determine if foreclosure purchase is the way to go is to do a little research. Find out the price for the home and factor in the cost of repairs. Compare this number to the asking price and the price of similar properties being sold in that area.
With a little luck, a little elbow grease and a touch of daring, you could have a fantastic new home for a fraction of your neighbor’s mortgages.
