Hunting For the Best Foreclosure Deal

Posted on November 9, 2009
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Foreclosures are plaguing the country – with half sunk in it and half trying to make a killing out of it. The number of foreclosures is staggering. The story does not end there. A massive number of ARM loans are poised to reset. The end seems to be nowhere near. The situation is giving the opportunity to many to buy a house that had seemed impossible during the boom years.
But the novice and hasty buyer should be careful for there are many hidden traps and pitfalls. Investors are descending in droves to take the best advantage of properties going for peanuts.

However it is not realistic to think that in prime locations the price will be down by 50%. The realistic approach would be 20% below the local market value. For prospective buyers of foreclosed properties the starting point should be to look into the price and the condition of the unit. But there is more to making the best deal.

Sean O’Toole of ForeclosureRadar.com said, “This can happen two different ways. The under-priced properties get a ton of activity and go quickly, but you can really get a better deal on an overpriced property.” A property that is over-priced will not get much attention and would most likely hang around like a wallflower for over a year. Thus if someone makes an offer the bank will immediately bestir itself.

Broker Aaron Lewis of The Lewis Team, California said, “For the homebuyer who’s up for the challenge, it can mean getting a property at less than market value. If the home is listed at $170,000 and needs $10,000 worth of repairs, take a look at comparable properties in the area. If the house would be worth $200,000 with the repairs done, then you’re getting a $200,000 property for $180,000 and that’s a great deal.”

Chappy Adams of Illustrated Properties in Florida said, “Lenders are often making significant repairs, replacing major items or offering repair assistance.” If once the house is repaired it becomes automatically a future good investment.
The prudent buyer would do well to comb through the locality keeping a sharp eye for well maintained yards, easy accessibility to shopping zones, commuting facilities and educational institutions. Jim Mazziotti of EXIT Realty Bend warns, “If there are a lot of homes in one neighborhood that are in foreclosure, be wary. Adams adds, “Some lenders are favoring cash transactions over finance purchases and taking deeper discounts to sell the property.”

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