It is an art to buy foreclosures profitably. With the foreclosure crisis sweeping the nation the real estate market is flooded with houses begging to be sold. But the market is not just dull – it is depressing.
It is a buyer’s market because first of all supply is outstripping demand and continuous entry of foreclosed houses is leading to further fall in prices. Sometimes 50% discounts are being offered.
The second reason for a dearth of buyers is that the credit crunch has led to a drying up of mortgage sanctions. For good reasons the lenders are reluctant to loosen their purse strings. The limited numbers of mortgages that are being sanctioned have strings attached.
The third reason is the high numbers of unemployment and joblessness. Without jobs or with reduced pay who will buy what? People are somehow struggling to survive.
Thus at the moment the prospect of buying foreclosures seems to be profitable. Foreclosure is a process, mostly judicial, by which the lender forecloses on the house that has been mortgage to get back unpaid dues. The lender may be the bank or government tax agencies. The foreclosure leads to a court auction where the house is given to the highest bidder. Since prices are at a record low it seems the buying foreclosures is the best investment. Buying foreclosures may be the best investment but it is not easy. Buying foreclosures is not easy even for those realtors who are not conversant with the trend of the past two or three years. What is happening is something new in recent American history. Buying foreclosures really needs a special type of expertise because of many pros and cons.
Buying foreclosure homes covers a wide range of houses – houses that have defaulted and are in the pre-foreclosure stage, foreclosed houses in the court auction and those that have failed in the sheriff’s sale and have been repossessed by the lenders.
The houses in the pre-foreclosure stage are the best bargains. This is known as short sale wherein the lender and the borrower come to an agreement about avoiding foreclosure and selling the house. Foreclosures are costly for the lender and damaging for the credit records of the borrower. Even if the lender suffers a loss it is better to opt for a short sale – money and time is saved. For the buyer these houses are usually in shipshape condition because it is to the interest of the occupant to keep the house in good condition.
Buying foreclosure houses can be tricky if it is actually in foreclosure. The occupants usually do plenty of damage – venting their frustration on it. The buyer does not the opportunity to thoroughly inspect it. The minimum-bidding price might be defective because it includes liens and hidden repair costs. The repossessed houses are lien free, one can inspect these but here again the repair may only be skin deep. Surprises may pop up late.
For the plucky and daring this is the best time for buying foreclosures.
Kevin Simpson, has been working on ForeclosureWarehouse.com studying the foreclosures market, helping buyers on the finer points of foreclosed homes. Try to visit ForeclosureWarehouse.com and begin your foreclosures by state search.
Kevin Simpson, GM Sales & Marketing, ForeclosureWarehouse.com
[tags]Buying foreclosures, profitably, crisis, real estate market, dearth of buyers, purse strings, lender[/tags]
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