SHOULD I CONSIDER BUYING A FORECLOSURE HOME?
With all of the foreclosed homes in town, you may be wondering, “Is buying a foreclosure something that I should do”?
It is our opinion that the purchase of a foreclosed home may be the most intelligent real estate purchase that can be made, especially in this market. The points to support this opinion are as follows:
1) Banks do not want to own residential real estate.
Banks and other lenders make their money on loaning money on real estate to other people. When their cash is tied up in the ownership of a piece of property that is not making income, they are losing money in two ways. First, the money they have spent on the property they own is not making money. In fact in some cases may be losing money because the cost of owning the property is a real cost. Repair, maintenance, utilities, and other costs are real costs to them which they will want to limit as much as possible. Second, and more importantly, the ownership of the property has what is called in the economics world, a lost opportunity cost. The money that is tied up in the property could be making money on other loans, rather than sitting in the value of the property.
In order to dispose of these properties, lenders are in many cases lowering the prices of the homes to sell quickly, allowing the Buyer to request closing costs assistance, and more. This situation occurs rarely in this market and should be taken advantage of as it will not last forever.
2) Interest rates continue to be at or near historic lows.
Despite the news you hear regarding the “credit crunch”, borrowers with good credit can still get conforming loans around 6% or even lower. With a buydown of interest rates, you can save even more money than by bidding lowball on your desired property. The deals are good on conventional lending. While 100% financing may be hard to come by, 95% loans are available.
3) You have a million choices.
There are as many homes on market today as there has been at any time historically. If you are a homebuyer, there are enough homes on market for you to find the perfect home for you needs today and into the future. If you are an investor, there are properties available that will bring you positive cash flow even with a minimum down payment. Gone are the days, either fortunately or unfortunately, of the “flipper”. The day of the savvy real estate investor who can buy a property and put it on market and skim a quick profit is gone.
With the reasons stated above, you should be able to see that the foreclosure market is rife with opportunity for the homebuyer or serious investor in real estate. Finding the properties is easy. Go to http://www.foreclosurefindertours.com and log in. You will be able to schedule an appointment to tour the city and price range you are looking in, work with an experienced and capable agent in this market, and let them do the driving, saving you both time and gasoline!
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