Are You Really Ready to Buy a Foreclosure?
Foreclosure properties still offer huge discounts for home buyers looking for new residences, vacation homes and investment properties but are you really prepared for the potential work involved?
Recent figures from RealtyTrac show the top 10 states for foreclosure discounts compared to regular selling prices ranging from 47% in Louisiana to 36% in Georgia but these bargains often come with a price. Even $10,000 foreclosure homes can turn out to be teardown and new construction projects running up tabs well over $100,000.
It’s all about how much discount on the front end is worth the potential work lurking after closing.
Do you know how many tens of thousands of dollars it will cost to teardown a foreclosure if you find too many problems after you buy? How much more will it cost to rebuild?
Even if your work is limited to rehabbing properties or what appears on the surface to be a little clean up and cosmetic makeover how much can you handle yourself, do you have enough cash reserves to account for overages and carry the overhead?
This all means cash money out of pocket unless you are using an FHA 203 (k) rehab loan, Fannie Mae HomePath financing or qualify for another type of rehab mortgage loan.
Make sure conduct thorough inspections and get multiple quotes from contractors. If you plan to resell after fixing up your foreclosure you need to know the ‘subject-to’ value or ARV, as well as which improvements will yield the best ROI and increase the actual appraised value.
If buying a home as a residence or rental property is it wiser to just buy a home which has recently been remodeled and be able to finance the improvements and enjoy the peace of mind of a brand new property look, feel and smell?
“Occupied, Unoccupied, Preoccupied”
Virginia & Tennessee among 40 states signing onto Foreclosure ‘Robo’ Settlement
The five largest banks in the U.S. (Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, and Ally Financial ) agreed to a $26 billion settlement for the roles they played in the mortgage meltdown. More than 2 million Americans could reap financial benefits from the settlement, the largest of its kind in history and the biggest civil-action suit ever against the housing industry. All 50 state attorneys general started working on the deal in late 2010 amid outrage over the corrupt mortgages. Though billions are laid out in the agreement, the money will likely help only a relatively small portion of borrowers facing foreclosure, depending on how effectively Washington manages the deal.
Some $17 billion of that would go toward writing down mortgage principal for an estimated 850,000 troubled borrowers, $3 billion could go toward restitution payments of $1,500 each to borrowers who lost their homes to foreclosure, and the rest could go to state funds for foreclosure relief
According to sources, Virginia & Tennessee are among those states signing onto the deal.
Barney Frank’s Work Is Done
Southwest Virginia foreclosures down 45.7 percent in fourth quarter 2011
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Try Absolute Auction
Renee in Corpus Christi and her siblings inherited a piece of property from her father. It still has a mortgage on it, and none of the siblings are willing to pay off the property. The property is only worth $40,000 or $50,000, and the mortgage is for $10,000. Dave suggests an absolute auction on it.
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Gen X Takes The Housing Hit; Boomers Only Grazed
Prices are about a third lower than they were in 2006, and they are continuing to drop in most cities. The National Association of Realtors says that this summer, prices fell nearly 5 percent compared with last year.
At this time five years ago, the white-hot U.S. housing market was starting to cool. Before long, it would slip into a deep freeze.
The number of notices of default jumps 25.9% from the second quarter. The increase comes as settlement talks have stalled between banks and state attorneys general over the robo-signing scandal.
