With a glut of foreclosed homes on the market, including REO properties, HUD properties and Bank of America foreclosures, many real estate investors constantly review foreclosure listings. They stay vigilant--on the lookout for cheap homes for sale and to grow their real estate investment portfolios. With the stock of foreclosed homes, borrowers in the foreclosure process and badly delinquent mortgages, the potential supply of foreclosure properties total nearly 3.5 million homes.
The abundance of foreclosed homes also has more small Ma and Pa investors looking to find cheap homes for sale to build their own nest eggs in the real estate business. In addition, many homebuyers want the best deals possible for their private residences. This category of buyers, hoping to cash in on their own cheap homes bargains, includes first-time buyers, empty nesters and families in need of more space.
Cheap Houses and Declining Home Values
In uncertain economic environments and falling home prices “cheap homes” refer to the availability of foreclosed homes, but with a twist. Often, these homes sell at significant discounts compared to the original loan amounts, or market prices when the homes last sold.
During periods of economic downturns, high foreclosure rates increase the inventory of foreclosed homes. The high number of foreclosure properties makes cheap homes available in all segments of the housing market, including low-income neighborhoods, middle-income communities and affluent areas. Cheap condominiums, cheap townhouses and cheap single-family homes can be found among the huge inventory of foreclosed homes for sale.
Finding Cheap Homes for Sale
Sometimes, homeowners in pre-foreclosure and facing financial difficulties will sell at a discount. However, most homeowners want to sell for as much money as possible. Homeowners, REO properties representatives and government foreclosures agencies usually know the market value of their properties.
Consequently, uncovering a constant flow of cheap homes might seem more an illusion than reality for most foreclosure investors. Typical foreclosure homes sell for an average of 5% to 10% below market value.
Nonetheless, it is possible to find cheap foreclosed properties for up to 50%, or more, off appraised values. In February 2012, the National Association of Realtors reports that foreclosures and short sales, “which sell at deep discounts,” comprised 35 percent of January 2012 home sales. In some areas of high foreclosure rate states, such as Georgia, Florida or California, the foreclosure ratio to sales might be even higher.
The Foreclosure Express Bus operates a brisk service providing a monthly tour of foreclosed homes through Broward and Palm Beach counties in Florida. It cost $99 per person. Cheap homes investors who put in the work can locate cheap houses for sale– or in this case, taken to them.