Foreclosure News and Advice for Potential Investors

Anthony Parker on Real Estate Investing

Foreclosed homes

The foreclosure market in the United States isn’t what it once was; at the height of the foreclosure crisis, hundreds of thousands of homes were entered into the pipeline each month (March 2009 recorded 315,000 foreclosures).

Now, though, the tide has ebbed, and foreclosures are not as plentiful as they once were. According to foreclosure figures released by research firms, there were fewer new foreclosures initiated in the U.S. in March than at any time in the past 7.5 years.

Across the country, only 88,000 new foreclosures were initiated. This is down by 27 percent from a year ago, which is a major improvement in a market that is still finding its feet in many areas. Part of this decrease is because fewer homeowners are behind on their mortgage payments. Only around 2.1 percent of all mortgages are in foreclosure, and only 5.5 percent are 30 days or more behind on their loans. Both figures are down sharply from the peak of the crisis.

The report also indicated that one out of every 10 homeowners were underwater, or owe more than the home is worth. This is a figure that often leads to foreclosures, but support for these types of homeowners has improved over the years. Plus, rising prices in many areas of the country has helped homeowners recover equity.

Advice for Foreclosure Buyers Includes Knowing What You’re Buying

Even though foreclosures are down, there are still plenty of discounted distressed properties throughout the nation available for purchase.

Going into the foreclosure market means knowing how to position yourself for the best possible outcome. For many, that means knowing what you’re buying before you commit. While it is difficult to see the inside of some homes that are for sale at foreclosure auctions before the auction, it is worth your time to find out as much as you can about the property, including talking to neighbors if possible.

You can also work with real estate agents who have been contracted by banks to sell REO homes. These agents often will allow you to see and inspect the inside, so you know what you are getting yourself into.

Before buying, also perform comparative market analysis on nearby homes, so you know what the home could sell for once it has been repaired and renovated (if necessary). Arming yourself with this knowledge can help immeasurably, as you will have a better idea of your budget and profit margins heading into the purchase.