Why Foreclosures are a Cheaper Option than Normal Properties These Days
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Buying a new property these days can be very devastating on your finances. A 3 bedroom house can easily cost you $250,000, which is why more and more people are buying foreclosures as they are becoming more affordable with up to 30% discount in New York and up to a massive 45% discount in the state of Ohio.
Buyers who choose to buy foreclosure properties are getting better deals than those who are buying new properties as they are currently 41% cheaper on average than non-foreclosed homes that have been sold. This means that you could potentially buy a $200,000 house for just $118,000 which is a massive saving and leave you with more money to redecorate or go on holidays or to spend on anything you want.
New house prices have risen to 6.2% (to an average of $250,000) whereas foreclosure properties have fallen by 2.5% (to an average of $170,000) and also the home buyer tax has fallen as well which makes it a well worth the time to buy a foreclosed home.
A reason for foreclosed properties dropping in price is partly due to the fact that banks are now cutting their losses, and instead of sitting on them like they have done in the past, they are selling foreclosed properties as soon as they get them, meaning that the cost of keeping the properties running (taxes, utilities other costs) while no one is in them is not added to the price.
But the main reason is because, unlike standard properties, the condition of foreclosed property is generally less than mint, meaning that some minor repair work and often redecoration is required before you can move in, but since the cost of the property is greatly reduced, after repairs and redecoration the property will still work out a lot cheaper than a standard property.
There are however some cons to foreclosure properties, this is shown by the declining number of sales during the last quarter (July – September). Foreclosed property sales fell sharply, in part due to the problems involved with the foreclosure processing errors that have occurred, the banks halting the sale of foreclosed properties because of these errors, and mostly because of people questioning the foreclosure process.
It is predicted that the foreclosure market is also going to decline during the 4th quarter too, this is because November’s figures have already shown some decline, combined with the fact that this time of year, sales are traditionally slower than the rest of the year. Also some foreclosed properties may have more than minor faults, meaning that the cost of restoration could be more than the savings that you would get from buying one.
Still, the savings that could be made from both buying a foreclosed property for the bank, or buying a short sale property (a property that the seller and the bank have agreed to sell for less than is owned on the mortgage) are incredibly high, the reason why foreclosure sales still make up a quarter of all property sales.
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