Low priced homes in the United States that need work done on them can be found for well under $100,000, according to listings firm Realtytrac. It believes that the lack of inventory on the mainstream property market could tempt more real estate investors to consider foreclosed homes.
As the real estate market works its way through the recovery process home buyers and real estate investors have found themselves facing a somewhat unexpected challenge, a lack of available property to buy. The latest data from the National Association of Realtors shows there was just a 5.2 month supply of for sale inventory in April.
Realtytrac says that those willing to consider what are known as fixer upper homes in the US may find they are competing against fewer buyers and are able to buy at a lower price. However, it points out that buying one of these kinds of property comes with its own set of challenges including financing the purchase and renovations. Many buyers pay cash but loans are available for these kinds of properties.
‘Low priced foreclosure homes are still plentiful in many markets. While these homes may be in need of more work than a typical home and are certainly harder to find now than in previous years, buyers and investors willing to put in a little extra legwork can often find the best deals in their markets on these foreclosure fixer uppers,’ said Daren Blomquist, RealtyTrac vice president.
Quote from PropertyCommunity.com : “I am seeing many offers for sale of US properties under the heading of Foreclosure sales. These are properties with existing tenants with rental income paid by the US goverment. These type of deals show returns of >10%. Does anyone have any experience of buying such properties? Is it too good to be true?”
A RealtyTrac analysis has found that nationwide there are more than 51,000 potential foreclosure fixer uppers. They are generally bank owned homes that were built before 1960 and with an estimated market value below $100,000. The best advice for buyers looking to purchase a fixer upper is to find a skilled real estate agent, according to Rich Cosner, president of Prudential California Realty covering Orange, Riverside and San Bernardino counties in Southern California.
‘Select one that works full time in the business and works for a well known and reputable firm. These are the agents who know where you will find the best possible property. Ask your Realtor for recommendations on where to get your loan,’ he said. ‘In order to present the best possible offer to the bank owning the home, you will want to have the lender pre-approve your for the loan. This is the only way you can compete with cash buyers,’ he explained.
Buyers looking for deals on fixer uppers should still be prepared to face stiff competition and act quickly, according to Emmett Laffey, chief executive officer of Laffey Fine Homes covering Long Island and the five boroughs of New York City. ‘Be ready to act quicker than you ever have before,’ he said, adding that buyers should be prepared to sign a contract immediately and remove all contingencies since demand for these homes is at an all time high in his market.
‘Since prices for bank owned fixer uppers are below market many of the deals are all cash. If a buyer is planning to obtain a mortgage it is wise to waive the mortgage contingency clause to be considered at all,’ he pointed out.