Posted on July - 02 - 2010
Three tips to buying a foreclosed home
A prospective buyer should beware of rash decisions. Not all foreclosed homes are bargains or even good buys at all. Its not just good enough to buy something cheap – is the roof good, are the plans approved, and, moreover, is it a good investment too?
It’s simply just not good enough to shoot for the cheapest house. There’s always a reason why things are cheap, and cheap is by no means an indication of quality. Property is never value when it does not appreciate, and position is king when it comes to making a wise investment. A buyer might enjoy the short-term benefits of a cheap roof over head, however, in the long run; even losses may follow due to falling value, and lack of equity.
- Location
The cheapest houses on a list are likely to be in impoverished, under-developed or even shattered areas. Purchasing without inspection is a sure fire way to buy regret. Whether planning to either occupy or rent, a home in a blighted crime infested area is seldom a happy place to call home. Prices in these areas also take the longest to recover, and money could be better gaining value in the bank.
- General Condition
Buyers tend to buy for the maximum that they can afford, and seldom have expensive repairs in mind when they do. A bad roof structure or poor drains can cost far more than the slightly lower monthly payments that a cheap home brings, and a house built on heaving clay can end up in total disaster. The moral of the story is to inspect before anything is signed. Cracked bath room tiles are not a worry; however anything more serious should give cause for a re-think.
- Best Places to Buy
Property speculators know that the safest places to invest in foreclosed properties are in stable areas with positive economic conditions like steady growth and high employment. That’s because they know that borrowers employed under those conditions are less likely to default, and send prices tumbling. South and North Carolina, Indiana and Texas have all benefited from stable economies and employment – as markets turn their median housing prices should turn quicker than in other areas where real estate is in the so-called bargain basement. These States were also spared the sharp upswing before the general market crash – this also contributed to their price survival rate.
Market characteristics, such as good location, condition, and a stable economic environment generally offer buyers better prospects than the cheapest houses on the list. That’s because they offer promise of an opportunity to turn a profit, even if sold on within the next few years.
Find value foreclosed houses at www.foreclosuredatabank.com.
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