What's the story with Foreclosures

Happy Monday Everyone!

Well as you all have heard the news...the banks are hurting and foreclosures are on the rise. We get tons of emails and phone calls from so many people wanting us to find them foreclosures. I figured it's a good time to set the record straight for those of you who don't understand how these homes are priced.

Flashback 5 or 6 years ago and foreclosures were a great deal. I sold many of them back then that were 50 cents or less on the dollar. Unfortunately this isn't the case anymore. Foreclosures are no longer the bargain they used to be.

For instance, if a home goes into foreclosure, the bank will hire a Realtor to evaluate the property. Our job as Realtors is to let them know the retail value of the property and the appoximate cost of repairs. At that point the lender sets the price. These days, unlike the past, the banks are taking the retail value and subtracting the approximate repair costs and that is the price. Keep in mind that most foreclosures have a loan amount higher than the value of the home and they were usually bought with zero money down. There just isn't any room for the banks to play.

So what does this all mean to you, the consumer looking to get a good deal on a foreclosure, there aren't many good foreclosures out there. Most companies that do this as a business have pulled back. They understand the current market. However, most average consumers or beginning investors don't.

Your best bet is to talk to your Realtor, hopefully here at Tropical Realty, and search for homes that have been on the market longer than 6 months. Then your Realtor can research what they paid for the home and if they have refinanced the home. I believe that is where you can get your best deal. If someone owes $100k on the home and it's listed at $200k and they need to sell, you have a lot more room to work than if someone owes $180k on the house.

I hope that helps a few of you understand the current foreclosure market. I know all those TV shows selling you kits are telling you that foreclosures are the way to go. However, keep in mind that this is one of the best buying opportunities we have seen in several years. If you are thinking about buying, this is the time!

As always if you have any questions or need any help with anything, don't hesitate to call or email me at mitch@mitchrealty.com.

Have a great day!