Find Foreclosure Properties Articles

If you are an investor or a first-time homebuyer considering taking advantage of the low prices of foreclosure properties, then check the following guidelines:

1. Research your local real estate market.
   Look for foreclosure listings in your local newspapers and on web sites. Compare current and previous weeks’ prices. You will see how the prices are declining and if they are bottoming out. If you see the same prices appearing for the same houses for some weeks, then probably prices have bottomed out.

   Check also if there are news about continued addition of new foreclosed properties to the housing market. Rising inventory means possible further reduction in home prices.

2. Be ready with your financing.
   As most everyone knows, you have more leverage if you have ready financing. The owners of the foreclosure properties can give more consideration to your bid price if they know your financing is in place.
3. Check foreclosure properties owned by the U.S. Department of Housing and Urban Development.
   The HUD might have properties that are priced much lower than foreclosed properties held by banks. Nevertheless, consider also the fact that banks are more strict in implementing foreclosure policies, hence you can be sure that their properties are free of liens and claimants.
4. Take advantage of the deep reduction in mortgage rates.
   If you are a first-time homebuyer, then you have at least three factors working to your advantage. They are lower interest rates, lower-priced foreclosed homes and federal programs aimed at helping lower-income families acquire their first homes
5. Negotiate directly with the owners of foreclosure properties.
   If you believe that you have adequately researched about foreclosure and home buying processes and pricing trends, then it is more cost-effective to approach banks, pension funds, insurance companies about their properties for sale than to hire an agent.

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Mortgage rates in the U.S. have reached their lowest level in three years, but these rates have not been successful in reviving the depressed housing market due to the continued flooding of the market with foreclosed properties.

Fannie Mae’s chief economist Doug Duncan that the reduction of interest rates will encourage some buyers to acquire their first homes, but the rising unemployment rate and the continued increase in foreclosures have been blocking the recovery of the housing market.

Nevertheless, the federal government’s efforts to help the mortgage securities sector prompted a bond recovery that reduced 30-year mortgage loan rates to 5.5 percent. The reduced interest rates also increased the number of home purchase applications by 38 percent and the number of home refinancing applications by 203 percent, according to the Mortgage Bankers Association.

Mortgage lenders also said that more borrowers refinancing their mortgage loans have shifted away from flexible-rate loans as lenders moved away from loose lending requirements to prevent further foreclosures.

Even with some movements in the purchasing side of the housing market, the inventory of unsold foreclosed homes continues to increase, putting supply at near record peaks. Although home prices have been decreasing to their lowest levels, consumers have not been responding to the housing market because of fears of unemployment and further declines in the national economy.

According to the U.S. Labor Department, the nationwide unemployment rate has reached 6.7 percent in December, the highest since 1993. The unemployment rate is computed by dividing the total number of unemployed workers by the total number of civilian employees. In November, more than half a million jobs were lost, bringing the annual total job loss to nearly 2 million in 2008.

Many financial analysts believe that the unemployment rate could reach eight to ten percent, potentially increasing the number of homeowners in danger of foreclosure. In just the first week of November, eight of the largest employers in the U.S. terminated 15,000 employees from their work force.

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It is considered as common knowledge that people are in the hunt for things that are worth their money. Investments like houses are surely one of the priorities of both newlyweds and old couples. However, people need to produce a great amount of money to buy houses. Good thing there are affordable units like foreclosure homes.

People do not just end to buy the first house they see while they are house hunting. Since a lot of money is involved, buyers seek the best ones that real estate agents and magazines have to offer. In a lot of times, people want to stick with their allotted budget. This is where foreclosed homes come in.

Foreclosure properties are those units that were made as payments or guarantees for debts or mortgages. They are being sold because their owners have given them up to their lenders. Once the properties have been foreclosed by the lender (usually a bank, finance company or cooperative), the properties are assessed and sold to the public as foreclosures.  Often times, lenders announce the sale of the acquired foreclosure properties in major news papers to attract buyers and speed up the sale.

What is best about foreclosure homes is that these properties are almost always in a good state. As a matter of fact, some of them would even qualify for a valuable price have they not been classified as foreclosures. However, there are still units that would require a little tweaking and refurbishing.

Buyers eying a particular foreclosed home must do their assignment. They have to take time to visit the unit and inspect its structure. Doing a little research about how the property ended up in foreclosure would also be beneficial. Buyers should also check the rates of the units in the area to ensure that they are being offered the right price.

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Citigroup Inc. has announced its plan to aid borrowers in stopping foreclosures and reworking mortgages—a big step for the second-largest US bank based on assets.

Because of the said announcement, the bank is now the major US lender concerned in helping borrowers. In the launching of the said program, Citigroup Inc said that the plan may result to having a $20 billion budget for mortgage refinancing. The bank expects to reach out 500,000 borrowers in the next 6 months.

The bank is more concerned with areas that have mortgages and foreclosure properties that, in their words, are likely to have economic distress in the near future. The bank has also agreed to temporarily stop processing foreclosure homes owned by its struggling borrowers who live in the said units.

But the bank maintained that such a privilege will only be given to borrowers who have enough income to support the lowest offered payments. Such borrowers must also make an effort to resolve their foreclosure-related problems with them.

Inspired by the Federal deposit Insurance Corporation’s plan to rework terms for IndyMac Inc. borrowers, Citigroup Inc. also announced plans of easing out terms and procedures for delinquent home loans. The said program also covers those delinquent mortgages that are expected to be under the list of foreclosure properties.

Although the bank had just made a formal press announcement, Citigroup Inc. reiterated that it has taken steps in helping borrowers since 2007. With this program, the bank has formally joined the pool of lenders that have recently announced similar programs. Bank of America Corp and JPMorgan Chase and Company have already made similar announcements earlier.

Analysts said that the bank measures were caused by the pressure that lenders are getting lately. Encouragements saying that banks should help their borrowers more are said to be fast on the rise.

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New York University professor Nouriel Roubini, the economist who correctly predicted the housing slump and the credit crisis, has predicted another 20-percent decrease in home prices in 2009. Patrick Newport of forecasting company Global Insight predicted a fall of 15-percent, slightly lower than Roubini’s figure.

As shown in the S&P and Case-Shiller housing price index, home prices have been down 20-percent across the U.S. since the peak posted in July 2006 as foreclosure homes continue to accumulate.

The other major reason cited for the continued decline in housing prices is higher mortgage rates, as compared to rates charged by banks in the first months of 2008.

Economist Lawrence Yun, head of a national realtors’ association, expects home prices to increase by about 2.8 percent in 2009. He opines that a wave of home buyers wanting to buy foreclosed homes at bargain prices would push prices higher towards the end of 2009.

Here are some tips for residential real estate professionals on how to optimize trends in the last months of 2008:

• Sellers need to show that their properties are in move-in conditions and that they have unique features.
• Sellers are advised to reduce their prices by as much as five percent below average prices in the area, as seen on zillow.com, especially if they are selling foreclosure properties or repo homes.
• Buyers should look for properties which have been offered for sale for several months. Most sellers are open to lower pricing deals if their properties are hard to sell.
• Buyer’s agent Barry Miller has suggested making one’s first offer about 13 percent below the seller’s quoted price. Sellers are more open to hard bargains because they know that there are lots of low-priced foreclosure properties on the market.
• Mortgage rates can also be reduced by home lenders if a buyer’s credit score is in the range of 780 to 820, according to John Ulzheimer of credit.com.

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Anywhere you look, you will notice that most local real estate markets are favoring buyers over sellers. But because of the current economic conditions, many buyers are still wondering if it is the right time to take the plunge. Of course, this is only logical considering the risks involved but if buyers check out the advantages they will most likely enjoy, then they should not wait any longer.

More Choices

One thing that buyers will be delighted with is the fact that there are presently a lot of homes for sale to choose from including repossessed properties. If you are looking to enjoy considerable savings, you will find these foreclosure homes to be perfect for your budget. Even with repair expenses, you will still end up with a good bargain.

Better Prices and More Incentives

Because of the tough competition among sellers, buyers will enjoy huge discounts. And with the declining home prices and sluggish home sales activity, you can certainly expect prices to go down even further. In some areas, there are already hints of a bottom and buyers should be aware of such condition in order to make sure that their investment will be successful.

Easier Negotiations

Since buyers have the upper hand, it will certainly be easier for them to win negotiations. This is probably the best reason why buyers are encouraged to take advantage of the favorable housing conditions. Sellers, at this point, are quite anxious to sell off their inventory of homes especially the distressed properties in order to cut back on holding costs.

With all these in mind, buyers should seriously consider getting back to the game. If you worried about the economy, you can get around this by doing some research about the foreclosure crisis. By learning more about the problems in the industry, buyers will be able to make informed decisions.

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