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Foreclosure
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Click Below For more Listing
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"In 2010, the average foreclosed home sold about 25 percent below market value. That is real money. You want to do your homework on both the property and the process," said Mellody Hobson, "Good Morning America's" financial contributor.
However, if there is any silver lining to this dark cloud above real estate, it is for those in the market to buy a home. But is buying a foreclosed home a safe investment? |
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| Pre-foreclosure sale: That's where you buy a home from the owner before the owner is foreclosed upon. Hobson said she liked this type of sale because the buyer and the seller were motivated. The seller, of course, wants to dodge the bullet of foreclosure. But the buyer gets the discount, which is typically in the neighborhood of 10 percent to 20 percent. The buyer also gets the opportunity to inspect the propert |
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| Real estate-owned: That's where the lender or the bank has the title, and it owns it. Typically you find that the property doesn't sell at as big a discount as a pre-foreclosure sale or an auction. There's much less risk there. You can get a mortgage, and you can inspect it. So it's really like buying a property from a regular person. It's just owned by a banky |
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Auction: An auction comes with lots of risks. You're buying the property, as is. That means you can't go in and inspect it, and generally people who have fallen behind on a mortgage haven't made a lot of home improvements or been able to maintain the home.You just don't know what you're getting.
There are also people who bid on homes at auction for a living, so you might be bidding against someone who's very savvy.
Generally, a home that's bought at auction sells for about 40 percent below market value, so you get an incredible deal here. But another downside is that you must pay cash for it. You cannot get a mortgage, because a mortgage company must be able to go in and appraise or inspect the property, which it can't do in this situation.
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