FORECLOSURE » Prevent Foreclosures

Foreclosed properties are becoming the most popular type of real estate investments people are making. By taking the time and making the effort to buy a foreclosed property, people are able to get huge financial breaks on their property purchases and many people are able to enter the real estate market for the first time in decade.

When you decide to purchase your foreclosed home there are several options to do with investment. You can choose to live in a foreclosed home or rent it out if it is going to be your investment property.

Foreclosed homes as your living space

First time home-buyers who were priced out of the real estate market during its boom are now able to make the dreams of owning their homes a reality. Many people happily buy, renovate and then live in the foreclosure they purchased for years.

If you are considering buying a foreclosed home, but are afraid of the stigma of living in a home that was previously seized, do not. By buying and living in a foreclosure you are actually helping the community at large maintain their property values as abandoned homes that are not maintained can negatively affect the bottom line. By buying and living in your foreclosed home you have made a great long term investment strategy for yourself.

Foreclosed homes as an investment

If you choose to purchase a foreclosed home as an investment, good for you.

You will also be contributing to the well-being of the community by restoring the property and renting it out to some good people. By investing in a foreclosed home, you can benefit.

You can find tenants to cover the monthly expenses of the rent and property taxes while your home builds value that you can tap into when needed.

The bottom line

Buying a foreclosed home for any purpose is up to the discretion of the owner. Before deciding between living in the foreclosed home you purchased or renting it out you need to properly evaluate your financial situation. Look at the bottom line, crunch some numbers and the math can help provide you with some guidance on your decision.

Everyone loves a bargain! Whether it is special, half-price sell or a huge real estate discount courtesy of purchasing a foreclosure, saving money is a thrill.

Many times, the discount promoted is the only discount offered as a bank's bottom-line cash value, which makes sure they do not take too much of a financial hit on the sale. One such scenario is when a person buys a foreclosed home because many times the properties are sold "as is" and repairs need to be made.

Diane got a killer deal on a two-bedroom, two-bathroom condo in Hollywood that she opted to purchase an REO. Upon the inspection, some repairs were brought to her attention. Because the bank stated the property was being sold "as is" she realized that if she wanted that home, she would have to foot the bill for all tweaks that needed to be done.

However, since Diane got the home for 35% less then market value and $14,000 less then the asking price, she had the money she needed to pay for the repairs herself.

Buying direct from the homeowners

When homebuyers purchase directly from the seller, there is a standard negotiation process that occurs. There is the listing price, the buyers price and somehow that ends up with a selling price.

Depending on market conditions, if a buyer gets an inspection and certain "red flag" repairs are pointed out, there is indeed some wiggle room left as there are human beings who are personally invested in the transaction who want to close the deal.

Getting a bank to pay for the repairs

However, when it comes to purchasing a foreclosed property from a bank, the financial institution is really only concerned about their bottom line.

They know how much money they need to take in to ensure that the financial blow they took on the foreclosure is at a minimum. Foreclosed properties tend to sell for 5%-35% less then other properties and at that point the bank is not interested in making any necessary repairs or negotiating the price down.

Banks do not have a cornerstone on the foreclosure market. The government also gets their share of repossessed property courtesy of tax foreclosures.

What is a tax foreclosure?

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