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Foreclosure Financing is Tough – But Prices Make it Worth It for Many

RealtyTrac, a foreclosure marketing and tracking service, reports that foreclosures accounted for 31% of all home sales in recent quarters.  And, purchasers of these homes paid a nice 27% discount to sales prices of non-distressed properties.  While these numbers do not include sheriff’s sales where properties went back to lenders, they do include short sales and REO (Real Estate Owned) properties already foreclosed and owned by the banks.  While the statistics showed that short sales brought the banks more money, discounted by only 15% on average to regular sales, it’s still a tough and winding road to a successful short sale.  And, since REO properties in foreclosure sold for an average of 34% less than non-distressed properties, it seems better for the buyer to wait until the bank owns the home to make an offer.Condominium distressed sales figures surprised even those involved in the study.  Over a four year period, foreclosures as a percentage of condo sales as a whole increased by a whopping 2500%.  Of course, these sales were concentrated in the “bubble” states, with Nevada as an example.  In Nevada, foreclosed condos improved from 75% of overall sales to 64%, still a really huge percentage of overall sales.It just might be a really great opportunity to shop for a home from the foreclosure inventory.  The trick for those needing to finance their purchase is to find the right home that does not need a lot of repair or rehab work.  Lenders want the home livable at the time of closing, so mortgages for homes stripped and in poor condition are usually not available.  However, some banks are fixing up their foreclosed homes, and there are always loans like the FHA 203k program that provides a way to buy the home and have the repairs financed as well, getting them completed after closing.

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