Out here in the trenches of real estate, I have been seeing an increase in foreclosed homes dumped on the market and the number of people looking for such homes who are expecting to purchase one for pennies on the dollar.? I have home buyer clients who specifically want to evaluate only foreclosures or HUD homes, those offered by the government, usually by a bidding process, because they want a house that they can buy cheaply and work on it while living in it.? As it turns out, most end up buying a conventional home once I show them a couple foreclosures and they begin to understand what they are up against.īanks are not stupid.? They know the value of real property and are not about to give it away.? It’s an asset to them, not a liability.? When they have to sell a home that they have repossessed, they offer it at market value, not necessarily for what is owed on the house.? The first thing they do is send a certified real estate appraiser to the property to determine a fair market price based on comparable homes sold in the area and any defects that may be present in the home.? Whatever figure the appraiser comes up with is what the house will be priced at.? And it isn’t cheap. There seems to be a big misunderstanding by the public, however, about the value of homes that have been foreclosed.? People tend to think that a foreclosed home presents a bargain, especially those who are looking for real estate investment property.? They think that they can buy a foreclosure cheap, do a little fixing up, and sell it for a hefty profit or rent it out or even keep it for their own home, expecting to reap instant equity.? Well, it doesn’t work out that way very often. "Potentially, you face a legal battle in that situation."Īnalysts expect the sudden questions to lead to a flurry of claims on homes now in the hands of other people, some spurred by lawyers trying to capitalize on the uncertainty.īabcock, for one, says his phones have been ringing off the hook with calls from people who were foreclosed on and want to know if he can get their houses back.Once the realm of only seasoned real estate investors, the interest in purchasing foreclosed properties has fanned out to a growing number of ordinary home buyers.? As the sub-prime lending fiasco continues to push homes into foreclosure and news stories appear everywhere about the record number of them hitting the market, many prospective home buyers are eyeing these properties as a way to get a lot of house for little money. "It is not clear, which is why the banks have imposed their own moratoriums on foreclosure," says CEO Tim Dwyer of Entitle Direct Group, the holding company for EnTitle Insurance Co., an Ohio title insurer. The issue of who has proper title in that situation could be uncertain. The situation is murkier for people who bought their homes with cash and didn't bother with title insurance. They're more likely to seek a large check than a return to a house with an outsized debt. If they failed to make payments repeatedly, evicted homeowners might not be able to afford their old homes anyway, something a judge would consider.
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