Foreclosed homes are always an attraction for real estate investors as well as for people who intend to buy a home to live in. There might be some reasons behind this popularity of foreclosed homes. Other than the possibility of a better deal, there are other advantages of buying foreclosed homes. Read on and find out what makes foreclosed homes a much better option.
> Available at Lower Price
Foreclosed homes are usually available at lower prices than their counterpart market values. Usually, the prices of foreclosed homes are the pending amounts to be paid to the foreclosing lender, which will have been partially paid off by the previous owners. As far as a buyer is concerned, that will be one of the best deals he can get. Foreclosed homes are available at a much lower price than their counterparts in the real estate market. There is also a possibility of bigger discounts on such homes.
> Good for reselling
Usually foreclosed homes are fixer upper homes that require some amount of repairs and renovation. Typically buyers of foreclosed homes resell the properties after making small-scale repairs, which will be very profitable for them. This follows the format “buy low, sell high.” This deal will attract a large number of investors because the reseller will be selling it for a price that can compete with the market value in the real estate market.
> Attractive Closing Cost
Foreclosing lenders are normally banks or government agencies. They will be in a hurry to sell the home to recover their losses. They will be ready to accept lower offers even on down payment, financing options, closing cost and other miscellaneous costs associated with buying a home. Many of these sellers offer such homes at attractive lower prices to overcome their business losses as fast as possible and these affordable prices turn out to be great deals for the buyers.
> Ready to use immediately
Normally a foreclosed home will be vacant and so it will be ready for use by the new owners as soon as they buy it. They will not have to wait any longer for the previous owners to move out thus, the winning bidder can do some procedures freely like renovating and reselling the property or settling down with their family as soon as possible. As it is a publicly owned property after foreclosure, the negotiations with the previous house owners will be reduced to a great extent. So a foreclosed home is really a “safe buy” for the investors.
> Easy availability of finance
As foreclosed homes are mostly owned by banks and are more concerned in overcoming their losses on the quick sale of the home, they may not be as concerned about the profit unlike individual sellers or real estate investors. Financial flexibility and great offers will be available from the foreclosed seller when buying a home at foreclosure auction. This means that buyers at an auction will have great payment options upon purchasing a foreclosed home.
> Greater probability of Profit
Foreclosed homes are one of the wisest ideas for investors because of potential profitability involved in it. The home they buy may require some minor amount of renovation or preservation. The amount spent on the home can be regained with great profit by resale, equity building, renting or other investment options. Since the possibility of profit in this investment is quite clear before the auction itself, there is very little risk involved for the investor.
> Tax Advantages
There will be significant tax advantages involved if the foreclosed home purchased is going to be the buyer’s primary residence. The interest to be paid on the mortgage will be tax-deductible. This could eliminate the profit tax involved when selling the home. The value of the property can actually be appreciating after making some repairs and other renovation while you are depreciating the asset on your tax return.
Overall foreclosures are a good way to get started in real estate investing, however, as with other investments other investments understanding the market, etc. is crucial.
Northern Great Lakes Property Management