Tips on Buying Foreclosed Homes
During rough economic times, foreclosure is a reality that many homeowners face. Owners will try to sell their houses quickly to get as much money as possible needed to pay the bank. If they cannot do this, the banks will place them on auction or on the open market. All of these opportunities provide smart potential home owners with the opportunity to get a home at a bargain price.
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Internet Searches
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An April 3, 2009 article from CBS's "The Early Show" indicates that Internet searching at websites such as Realtytrac.com and Foreclosures.com can help you locate the areas with the lowest cost for homes in foreclosure. The article indicates these lowest cost options will usually be in an area where there are a large number of foreclosures and banks are trying to reduce their inventory of foreclosed homes in that area. According to the same article, foreclosed homes can be found for a price that is anywhere from 20 to 80 percent below market value. Homeloanbasics.com suggests an additional way to find foreclosure properties is to contact your local government. Foreclosed homes must be listed in public records.
Research the Neighborhood
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The article from "The Early Show" recommends not using the lowest price as the only factor in your decision. Research the neighborhood where these low-priced foreclosure homes are located. Areas with a high crime rate and high unemployment rate can take longer for housing prices to recover than in areas with improving economic and social indicators. An improving housing value market can help you sell your home for a profit later on, or get a more substantial home line of equity loan in the near future compared to one where home values rise slowly.
Who to Buy From
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A report from WTHI Channel 10 in Terre Haute, Indiana, published on May 21, 2009, indicates that purchasing auction properties owned by banks is the best way to purchase a foreclosed property. This is referred to as an REO (real-estate owned properties). These are foreclosed homes that were up for auction at one time but did not sell, so the bank has put them on the market in an attempt to sell them instead of trying to auction them again.
Auctions are a good opportunity to buy before these properties are placed on the market by banks. There are some concerns with auctions, though: you cannot tour the house or get a home inspection according, for example. They do suggest trying to approach homeowners before they go up for auction instead, and that way you can get a home inspection. The owner will be motivated to sell, but might also require that you agree to buy quickly before the property goes to auction.
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