The housing market is made up of a significant bulk of foreclosed properties, which account for at least 19% of the total sales for the entire market. The rate is even higher for states where the housing boom was initially birthed such as Arizona, Florida and California. Statistics also show that 1 in every 371 homes filed a foreclosure in the month of September alone.
This large interest in foreclosures raises the question of whether buying foreclosures could really save some money versus constructing or buying newly-built homes.
According to Zillow.com, the housing prices in San Francisco area where 60 percent of the transactions in the housing market involve foreclosure re-sales, the average price is only 47 percent of what you will usually pay for non-foreclosure properties. The amount of potential savings also vary depending on the location of the property, but on the average, foreclosure prices are about 28 percent less than non-foreclosure prices, taking into account the distinct differences between these properties.
There are also a lot of other factors that one must consider in buying foreclosures. Purchasing one could involve a longer transaction than buying non-foreclosure properties. One must also take into account that in buying foreclosures, having title insurance is critical to protecting the investment. The CBS money watch continuously reminds buyers to conduct a title search, which would allow them to discover any defect in the property before parting with their money.
Property home inspections are also undeniably important if one wants to avoid any problem with the structural and physical integrity of the house. There have been reports that disgruntled evictees resort to destroying or trashing certain parts of the building. A personal visit with a licensed and professional home inspector will enable the buyer to evaluate the property before deciding to buy the foreclosure.
But disgruntled evictees are not the only ones that buyers should watch out for.
There are foreclosed properties that need more repairs than the others, hence, requiring the buyer to shell out more money on top of the purchase price. A careful assessment of whether these repair costs if added to its price would still be a reasonable investment will give the buyer a good ground on which to base his decision.
In sum, all these factors, if weighed in correctly, will definitely accrue to one’s advantage when buying a foreclosed property.