Stop Foreclosures; How your Investment Can Benefit a Community

By: philip smith

Why get caught in the mob mentality and wait until the passage of timeand the return of price appreciation will stop foreclosures? If ever there was a time for buyers to invest in foreclosure property its now. From the West Coast to the East, in the Midwest and the Southeast, foreclosure filings are being recorded at the highest rates ever. No communities or house price brackets are immune. Investors seem to be reluctant to take advantage of the buyers markets and that could be for one or two reasons; the belief that prices have yet to near the bottom of the curve, or that they, like many other would be home buyers are finding some financing options of recent times closed to them.

Buying foreclosures is not taking advantage of the misery of someone's financial disaster. It's a business or personal decision to buy real estate that came originally on the market unwillingly, in the hope that savings can be made. The facts are that any buyer other than the lender unable to recoup loans in default will bring advantages to the immediate community, the lender and the borrower in financial distress.

An investor buying bank owned and other REO property ensures a vacant or illegally occupied property gets a new lease of life. Repairs are made, presentation, security and hygiene issues disturbing the immediate neighbors are rectified. Benefits to all parties involved can be realised when a home in pre foreclosure, the period after the official notice of default is filed but before the foreclosure sale at auction, is successfully sold to another home buyer or to an investor. The seller avoids the long term impact of a foreclosure on his credit record, he may also have retained a little equity, and can move on, making a new start knowing he may be able to buy another family home in the not too distant future. The lender recoups whatever portion of the total default was realistically possible (remembering that the default amount included overdue interest charges and other bank costs). He has saved up to $60,000 in some states in costs of bringing the property to auction.

The community has also benefited. There is one less foreclosed property to weigh heavily on the market value of other homes in the immediate vicinity at a time when home prices have flattened or are falling, adding to the likely scenario of more defaults as some homeowners fail to refinance their way out of the increasing burden of readjusting loans. The reviving interest of buyers in regions where underlying fundamentals such as job growth, a diverse economy and a need for affordable accommodation exist is bound to help stabilise the housing market.

Foreclosures
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