Looking for a Deal? Look for Short Sale Properties

Investors will be pleased to know that banks are becoming more lax on accepting offers on short sale properties and foreclosed home, providing great investment opportunities.
| Wednesday, September 14, 2011

The current real estate market with its low home prices and low interest rates is great for one thing—investing! As the market continues to struggle, investors can take advantage of short sale property discounts.

Lenders are essentially up a creek without a paddle and are doing whatever they can to rid themselves of their foreclosure inventory; as a result, investors and homebuyers can purchase properties for incredible deals.

Actually, many people have already been snatching up the bargain properties with approximately 1/3 of all home sales being from distressed homes. How much of a deal are these homebuyers receiving? A nice 30-40% off! (These "distressed homes" include both pre-foreclosure properties and homes that have been foreclosed upon by lenders and resold.)

Of the distressed homes for sale, 12% of home sales were short sale properties, which is up 19% for the 2nd quarter of 2011. However, this number is still 12% less than the same time last year. Why? Last year there were tax incentives to encourage homeowners to purchase properties to alleviate the real estate market. However, these tax incentives have long expired, leaving homeowners weary and therefore buying less.

In fact, mortgage applications have declined which is indicative of lower consumer confidence and a lack of perceived security in buying a new home. However, with the low home prices and low interest rate, it is more of a buyers' market than ever before.

Either way, investors and homebuyers should definitely consider purchasing pre-foreclosure properties if they are seeking to obtain a bargain on a new home or investment property purchase. These properties can be snatched up at a fraction of the cost, often being 30-40% below the value of similar homes on the market – and can also be purchased without ever stepping foot onto the auction floor.

In conclusion, since the real estate market did not make an incredibly quick recovery, lenders have been bombarded with foreclosure properties and other distressed homes that make them liable for these abandoned homes. As a result, they are becoming more lax in the offers they are willing to accept. This leads to incredible investment opportunities for anyone seeking a new home or an investment property.  

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