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Are you a homebuyer thinking about how to buy a foreclosure to save money? According to the National Association of Realtors (NAR), the foreclosed properties in November 2015 sold at an average of 15% below market value. RealtyTrac, an online marketplace for foreclosed homes, reported for the same month that the median price of a bank-owned property was 37% less than that of a non-distressed home. Regardless of whose figures you believe, the purchase price of a foreclosed home is typically below market value.
While foreclosure activity appears to be showing ‘a remarkable improvement’ according to Dr. Frank Nothaft, chief economist with CoreLogic, a property information, analytics and data-enabled services provider, Nothaft says ‘there are still pockets of areas with high foreclosure activity.’ CoreLogic reported an inventory of 448,000 foreclosures in November 2015, the lowest since November 2007.
Knowing how and where to buy foreclosed homes may tempt you to score the deal of the decade, but before you get carried away, here are some facts and tips for buying foreclosed homes to help you decide whether that’s the best home buying strategy for you.
Read more: Buying a home? Here are 9 costly mortgage mistakes to avoid
Where can you find the largest inventory of foreclosed homes? Despite fewer homes last year in some stage of foreclosure — default, on the auction block, or bank-owned — as of November 2015, New Jersey, New York, Hawaii, Florida and the District of Columbia had, in that order, the highest inventory of foreclosed homes. Fifteen other states, including Maine, New Mexico, Nevada, Connecticut and Pennsylvania, also had above the national average foreclosure rate of 1.2%.
If you happen to be looking for a foreclosure in those states, you might have a bit more to choose from, but you don’t have to relocate to hunt for a bank-owned property. You can find them online or in person in your own neck of the woods. Likewise, if you don’t want to limit your horizons, you can use the same search and purchase methods from afar, especially if you plan to purchase by online auction.
While the price may be right, keep these tips in mind when you consider purchasing a foreclosure:
Due to the special nature of foreclosed properties, you may decide buying one is not for you. If you do decide to pursue it, work with your own real estate agent and a home inspector familiar with foreclosures.
Read more: Foreclosure predictions for 2016
This post was last modified on March 22, 2017 1:07 pm
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