All real estate investors will tell you a foreclosed home that is priced-to-sell could become the deal of a lifetime. That's especially true right now because there is an over-abundance of distressed properties on the market. We are still seeing more foreclosures added to the market and there is no question that there is also a fast growing interest in foreclosures. Trulia.com says searches for foreclosures on its website were up more than 200 percent in the first quarter this year.
While many consumers are tempted to cash in on a foreclosure deal, those temptations come with reservations. Consumers believe, when it comes to foreclosure bargains, the risk may not be worth the savings and more half of those surveyed said they would consider buying a foreclosed home, but they also indicated that they are jittery about the prospect.
Surveyed consumers said they are most reserved about hidden costs, undue risk and the possibility of a foreclosed home losing value and wiping out purchase price savings.
Those more inclined to shop foreclosures were single, rather than married; men, rather than women; younger adults (18-34), rather than older adults (55 and older); and those with kids in the household, rather than those without kids.
"What's striking about these findings is that while U.S. consumers recognize the purchasing opportunity presented by foreclosed homes, there are definitely some reservations about the process," said Pete Flint, Trulia CEO.
Flint says consumers can cash in on foreclosures, but only with a measured approach.
That approach includes:
Solid background information. Almost 20 percent of men aged 18-34 and 20 percent of single people don't even know what a foreclosure is, according to Trulia.com. Get some background information not only on the details of the foreclosure process, but information about the complete process in today's market.
Expert assistance. Work with a real estate agent experienced in foreclosures and the local market.
Market knowledge. Look at neighborhood data with emphasis on real time sales. Compare current and last year's home values to determine which way the market is moving. Expert help should have this information at their fingertips.
Mandatory inspections. A professional inspection minimizes hidden costs that could cut into any savings realized by purchasing a bargain-priced foreclosure.
Buy at the right time. Each of three stages in the foreclosure process has its pros and cons. Pick one that's the best fit for your investment strategy. The three stages are: Short Sales (pre-foreclosures) REO's (bank owned), and auctions.
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