Foreclosures: a Disappearing Bargain Investment

By: Joe Cline

Does the possibility of buying a foreclosure property leave you feeling slightly uncomfortable? It is a sad reflection on the times to write that it is currently a good time to invest in a foreclosure property - but - maybe not for long!

The thought of buying a foreclosed property can feel slightly 'opportunistic' and it may be that many potential buyers opt to avoid it. Well, it should not represent this negativity, because when buying a foreclosure property you are probably doing the previous owners a favor.

By law, once the foreclosure order is finalized it cannot be rescinded in favor of the original owners again. Once foreclosure has finalized, there is no hope for the previous owners to re-own.

Having got that out of the way, and having acknowledged that someone has to buy it - why not you? It is no surprise to report that foreclosures are up, but to realize that the figures are up 94% over this time last year is quite a revelation to most of us!

As usual with any commodity, the rule of supply and demand is coming into play: when there is too much of anything the price will usually drop.

If you feel that buying a foreclosed property may be one way for you to get into the property market, then it is time to move. The reason is because the choices in the foreclosure market may decrease due to the fact that there is more help out there.

As of the month of February, a new organization has been set up to help people with all types of mortgage shortfalls. Several of the affected banks got together to try to decrease the number of homes that would be surrendered.

The mandate for this group, which is called 'Project Lifeline', is far broader than the mandate for the 'HopeNow' team, and it would appear that it would be able to help a far larger sector of the distressed homeowners out there.

It is great that people are getting help from 'Project Lifeline' to save their own houses; the whole country must feel some relief for them. However, if you are looking to buy a bargain, it means there may be less choice soon.

The amount of inventory being returned to the bank is proving to be quite a challenge for the banks, and they certainly do not want to switch to the realty business. It is in their best interests to find a way to help these distressed home owners to keep their homes. This has been a serious problem for the banks; for instance this year in Miami alone, the properties that have been taken back are up by 252% from last January.

Many of these homes end up in real estate agents' offices. Most real estate agents have a selection of homes on their books which may sell for less than market price. Some homes have ended in foreclosure, some are short sales, some are real estate owned (REOs) and others belong to the bank or Lender.

It is a complicated process trying to buy one of these homes, and you will need to work with a real estate agent to feel comfortable with the rate at which the sale proceeds. That is, a foreclosure deal can happen so fast that you may wonder if it is all in order, yet sometimes a short sale will be very taxing on the patience of all concerned!

Real estate agents are familiar with the processes of these deals, and will also know if you have the credentials to successfully pursue them. If you are looking for a home that is more affordable, your first step will be to visit your real estate agent.

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