It used to be that when you mentioned a “foreclosed” house people shuddered and thought of horrible, dilapidated homes that were unlivable and needed a ton of work before they could even be re-sold.
The thought of living in that home was almost unheard of and if people did so they tended to be quite ashamed or at least felt a certain stigmatism towards the idea of buying and living in that house.
Basically, foreclosures were homes purchased by either those who “flipped houses” for a living or invested on houses for rental units. People who wanted to purchase a home and live in them went about it in the typical fashion of purchasing a home from a seller and viewing the home in the most pristine condition those sellers could possibly get it in.
Gone Are Those Days
Well those days are gone! The stigma of buying foreclosed houses has not only been removed but it has almost taken a turn in the opposite direction; with people seeing the purchase as a ‘smart financial move’ in many cases. With the onslaught of foreclosures and short sales hitting the market, literally flooding the market with houses of every type, style, and condition buyers had ample homes to choose from and great prices to work with. Suddenly people who had been putting away money and creating a decent credit history in order to buy a home had a lot more options to purchase homes that were in foreclosure at much lower prices than purchasing homes from sellers at true value prices. While this hurt the seller, the buyer has seen a whole new way to look at purchasing a foreclosed home.
Buyers have acquired foreclosed homes over the past two and a half years at about 3 times the rate of previous years. Unlike the former years, many of these buyers are not investors and are actually looking at the homes to live in as their main home. In some areas and climates, for example Florida, foreclosures were the best way for “Snow Birds” or those who travel south for the winter, to acquire a home at an affordable price. In many cases these homes aren’t like the foreclosed homes of the past where literally thousands of dollars were spent repairing them or even worse, in many cases a totally gutting of the home and rebuilding & repair were needed. Generally low-end materials were used to bring the house into “livable” condition and then rented out to make a fast buck.
Today’s Foreclosed Homes
Today, many foreclosed homes are simply homes that because of bad economic times, lost jobs, and upside down mortgages have been foreclosed on. Good people who have found themselves in bad positions simply allow the banks to take the homes and walk away from them. Many times these homes are even in upscale housing areas and extremely well kept homes that were owned by double income or single higher income families. The houses were kept up, repaired and maintained regularly as needed and in excellent conditions because these are the types of people who owned the homes. This means that while the bank knows they’re still more valuable than a home that’s been foreclosed upon and then abused and wrecked before the homeowners left; they also know that actually owning a home is not the position they want to be in. Lenders want the money coming in for these homes and not be in the position of having to put money out to keep them up. For a potential buyer this means that you have an opportunity to get a very nice house, in good to excellent condition, for a bargain price.
In a recent study by Realtor Dot Com, 92% of potential buyers of foreclosed homes had plans of living in these homes. This is truly an unprecedented number in comparison to the past history of the sale of foreclosed homes! With the types of homes being offered under the foreclosure sale sign changing, the stigmatism of buying and living in them has changed also. People are beginning to see the positive side of buying foreclosures and actually living in them; many of them even as first time home owners. So what are the positives of buying a foreclosed home in today’s market?
- More house for less money
- No longer only abused and torn apart homes are available but homes that have been kept up until the owners move out
- Minimal damage, repair, and upkeep needed to get the house in livable condition
- Getting a great deal on a good solid house
- Often lenders who own foreclosed homes are more willing to work with buyers to give them the money to buy
- Lenders are more willing to make deals to get rid of an excess of homes under their ownership
- Higher valued homes selling at lower costs can sometimes allow for additional funds to be leant so the repairs that do need to be done can be taken care of
- With 1.5 million foreclosures backlogged at one point – there are a number of homes to choose from
The Statistics
Buyers interested in foreclosed homes has skyrocketed by 159% in the past two and a half years.
64% of overall buyers claim they are very likely to be interested in foreclosures as opposed to only 25% of buyers who would be likely to buy a foreclosed home two and a half years ago.
Common sense tells us that the 1.5 million backlogged foreclosures that were with us at the prime of the foreclosure epidemic are being purchased quickly by not only investors but everyday buyers; reducing the number of foreclosures available even faster than they used to sell because the type of buyers have changed during this trend.
Areas that are going to be affected by another increase in foreclosed homes entering the market are states that require the judicial system to be involved. Most of these states are in the Northeast and Midwest sections of the U.S. so while the non-judicial foreclosure states may have seen their peak in foreclosed houses entering the market, the Midwest and Northeast are either experiencing their peak foreclosure sales or expecting to see them very shortly.
While real estate prices are increasing slowly, areas that are just beginning to be inundated by judicial foreclosure homes may actually see home values lower during this time.
What Does It All Mean?
Basically you have to know the area you are in and if your area has or has not experienced the peak time of foreclosed homes entering the market. Work with a Realtor to find listings of foreclosed or short sale homes to potentially get better prices and deals; along with getting a jump on when these homes hit the market.
Buyers can feel more confident that the majority of the homes being offered under foreclosure are going to be homes that have been cared for, at least for the most part. There will be fewer houses that have been abused and unmaintained in comparison to previous times when foreclosures were homes that were basically fixer-uppers or very distressed properties.
People no longer think of buying foreclosed properties like buying piles of trash and transforming them into low-end, money making houses and rental units. Foreclosures are not just for investors anymore. The stigmatism of living in a home that someone else lost to foreclosure has been lifted due to the number of homes available, the types of homes available, and the situations attached to the homes that are available.
Foreclosed homes are often an excellent way to get a good deal on a nice piece of property. You no longer have to feel embarrassed or worried about the words “foreclosed home” presenting an instant stigmatism of a gutted, worthless piece of property that needs thousands of dollars of work just to make it livable. Today the words foreclosure has begun to instill thoughts of a great deal and a financially savvy move.
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