Foreclosure activity in the US housing market has continued a downward trend. Actually it has hit a new low reported by CNBC in June of 2014. No worries though…there are still plenty of foreclosures on the market and you can get in on the action.
There are two typical ways to buy a foreclosure…bid on at an auction and the traditional way of home buying, working through an agent and placing a bid on the home. Each has its own merits and it also depends upon the buyers experience with purchasing real estate.
Placing a bid at a foreclosure auction means you won’t have the opportunity to have an inspection done on the house. Thus, you don’t know what condition the foundation, or other portions of the house is in. Your bid would be based upon the market value of the home vs a possible bidding war at auction.
Conversely, by going through an agent you can have an inspection done on the home prior to bidding, therefore eliminating any surprises. You also have the opportunity to do a walk-through prior to placing your bid.
Normally there are two types of foreclosures – distressed and non-distress. Naturally the distressed home is going to require more repairs. This means you need to calculate those costs into the total price of the house. The distressed home can usually be bought at 20-40% less than the non-distress. However, with unknown remodeling and repair costs this aspect must be taken seriously. The non-distress purchase is the safer bet. Little or no repair or remodeling costs are a plus.
The correct way to buy foreclosures is to consider both methods plus the homebuyer’s intention with the house. Is the buyer going to live in the home, rent it out on a permanent basis or as a vacation property, or sell as soon as the repairs and/or remodeling is complete? With a good piece of property, investors can turn their property into rentals that can yield a significant amount of income to rival other short term investment opportunities.
If you are interested in cashing in on this incredible chance for savings and potential income, try searching for reputable listing services such as EHarvest Homes in Mesa, Arizona. As of today’s date there are close to 2,000 foreclosed homes on the market in Mesa.