The financial fiasco of 2007 was devastating news for those speculating in real estate. Prices in many areas plummeted to half their value. Although real tors and the press tout real estate gains, prices still remain low. Proof of the seriousness of the situation is the fact that we have rented a condo in the same building for the past ten years. For the last three we have had to move to another condo as each of our rentals fell to home foreclosures.
Investors encourage buyers to buy foreclosures from a long list of home forecloses advertised by banks and real estate companies. It is tempting when the $600,000 property of pre-2007 is now listed for $230,000.
This would seem to make senseif you wanted to buy foreclosures or speculate in real estate with home foreclosures. How do you find the right buy foreclosure property?
Bank home foreclosures main goal is to recoup its loan plus interest to break even. One of the things you need to get to buy foreclosures is clean title. This means that there are no liens on the property or that existing liens have been wiped clean or forgiven. Someone might have a lien on the property if he had installed a bathroom or done landscaping and not been paid. If you are considering buying a foreclosure property, make sure you are given a clean title to that property.
Many people who are on the verge of having their property foreclosed on attempt to sell short. Short sales are a quick way to get out of borrowers crisis. All three of the condos weve rented in the past three years have gone to short sales. Often, as in our three cases, the owner short sells the property back to the bank.
Short sales areas the name suggestsfast. They can be a gold mine opportunity for a prospective home owner or a speculator. The bank sells fast to recoup its money. Theres just one catch. Almost all short sales on home foreclosures are flagged as is. That means if the previous owner left the place in a mess or wrecked walls or carpets, thats what the new owner gets. Because home foreclosures come with more than the usual buyer beware risks, making sure you have a reliable real tor is crucial.
That said, IF I were in the market for a condo, Id snap up one of those three condos in which I wintered. They all need work but at less than 50% of their original value, these home foreclosures would be a real deal.
If you are a risk taker, hedge your bets. Learn as much as you can about the history of the
home foreclosure, and who was and is living there. Remember people about to experience home foreclosure are most often sad and angry and frustrated. These are not traits that lend themselves to lovingly caring for property. So, be realistic, be vigilant and be prepared to have to make some repairs. Get in and inspect the foreclosure property. On that note, enjoy the foreclosure bonanza. Its an ill wind that blows nobody good!
