Low interest rates and a steady supply of foreclosed homes made buying a foreclosure home very tempting in 2010 heading into 2011. Both investors and first-time home owners are seeking out foreclosures as a way to buy a home at below-market prices. Although foreclosures can be enticing, homebuyers need to do their homework before heading off to the foreclosure auction.

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The Price of a Foreclosure

Although there are deals to be found, the average foreclosure sells for about 5% below market value. This is in part due to the lack of equity in the home. Lenders try to recover as much as possible from the sale to make up for the loss. Buyers in search of a deal need to focus on location of the property and the selling price of surrounding homes to ensure that they are getting the best value. The condition of the home is also a large factor in the cost. Many foreclosure homes are left vacant and received little to no maintenance. This will add to the cost of the home and may dissipate any savings gained from purchasing a foreclosure.

Financing a Foreclosure

Ways to Buy a Foreclosure

References

Resources

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