Following the burst of the real estate bubble, foreclosed homes flooded the market and continue to do so at a staggering rate. Foreclosed homes are bank owned properties that have been seized after the original owners were unable to fulfill their mortgage obligations. The huge number of foreclosed homes is due in part to the overly relaxed lending standards of banks throughout the last decade as well as the current economic conditions which have forced many well-intentioned individuals out of a job and eventually out of their home.
Foreclosed Homes in the Real Estate Market
The volume of foreclosed homes being sold alongside traditional sales in most real estate markets has driven the prices of all homes even lower. Banks are collecting homes at a record rate and are then forced to sell the homes as quickly as possible to attempt and resurrect as much value from the sale as possible to quickly pay off the bad debt.
For buyers, this is good news. Banks want the properties sold quickly and to facilitate this, offer the properties at prices often far below market rates. Foreclosed homes are not sold directly by the banks, however. They are put on the market by specialized real estate agents who often handle more than 50 new foreclosed properties every month. These circumstances and the legal aspects of foreclosed homes make it complex to find and buy these discounted properties.
Buying Foreclosed Homes
For many in a position to buy, foreclosed homes are a terrific opportunity to invest in the long-term growth of the real estate market and to buy a home as a primary residence for far less than they would have just a year ago. Buying foreclosed homes will require the aid of a real estate agent and a lawyer well versed in the legal aspects of foreclosure in your state. The laws regarding legal foreclosure proceedings, including buying foreclosed homes, differ by state and having expert guidance through the process will not only give you peace of mind, but might save you from legal hassles down the road.
A buyer’s agent is also necessary simply to get in touch with many of the agents selling foreclosed properties. Due to the nature of the properties, these agents often don’t work with individuals, preferring to work with other agents to simplify the selling process. Having a real estate agent does not negate the need for research and information gathering, however.
Only you know what your expectations are for a property, foreclosed or not. Doing your research can bring you additional information about foreclosed properties in your area including those that aren’t readily available on the traditional MLS listing agents use. When considering foreclosed properties, be ready to invest time in locating properties that meet your criteria and jumping through the many legal hoops that will be present in the buying process.
The end result of your research and diligence, however, is a home heavily discounted beyond the market rate ensuring you not only get a bargain now, but can count on high rates of return as the market begins to recover and real estate appreciation starts anew.