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How much can I really
save?
Let’s look at this example:
Say you’re in
the market for a $300,000 house and the comparable market analyses
supports a price of 100.00 per square foot. Wouldn’t it be nice to
actually buy the house for $90.00 a square foot? Saving at least $10.00
per square foot would bring the purchase price down to $270,000 saving a
cool $30,000 to use as you wish. Many people buy foreclosures to get a
bigger house, some buy to get a lower mortgage payment, others just want
to hedge against any further devaluation in the market.
In our
current real estate market it is very
common to see foreclosures that offer values like the example above,
especially in areas like Frisco, McKinney, Prosper and many other out
skirting suburbs
in the DFW area.
In this scenario,
cutting $30,000 off the list price also presents another financial
benefit; you will never
have to pay interest on that money
saving another $48,263.35 over the term of the loan. The total savings would be about $78,263.35
of non-taxable money.
How many people make that kind of
money in one month?
There is only one foreseeable disadvantage you
will notice when buying a foreclosed property. Because the actual value
of the house is higher than the purchase price, your real estate taxes
will be based on the assessment, not the purchase price. When the
tax assessor evaluates a property, they use market value for that area and not what you paid
for the house at closing.
The
Advantages of Buying Bank Foreclosures
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All liens against the property are removed once it becomes an
REO.
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Unlike properties acquired at the foreclosure auction, REO's can
be inspected prior to or during the contract period and can be purchased using
conventional financing similar to any other home purchase.
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REO foreclosures are listed with real estate agents and are
added to the MLS making them easy to locate.
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While some pre-foreclosures are often in deplorable condition,
Most REO's have been cleaned up and are in move in ready condition, and the
vast majority meet lending requirements. Intermittently, foreclosures in Frisco
are
acquired from homebuilders and have never been lived in, these homes are
generally in
pristine condition.
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Some lending institution that own the foreclosures will
often offer a better deal on financing if you borrow through them.
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Some lenders that own properties through a foreclosure will
provide an allowance for certain repairs, although most will resort to
discounting the price to compensate for any deficiencies.
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While in hot markets, you may not see any difference in price
between a REO foreclosure and a normal listing, during slower markets like
what we are enduring now, you can pick up Frisco foreclosures at very
attractive discounts.
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The primary advantage of buying a REO
foreclosure..........
banks do not like holding these foreclosed houses on their books, and try to get rid of these
properties as quickly as possible. The best option they have to sell their
unwanted homes is to set the price below current market value thus drawing out
the bargain hunters ready to jump on the best deals.
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