Pre-foreclosures – Locating the Ideal Neighborhood to Buy a Home


Many people are either losing their homes to foreclosure or walking away because it doesn’t make sense for them to keep making expensive mortgage payments, when the house is worth less then the remaining mortgage. Currently 50% of home sales across the US are foreclosed homes. Although the real estate crisis is worrisome for homeowners, it is providing opportunities for families and investors.

Most real estate investors see this current crisis as an opportunity as it’s the perfect time to buy cheap and hold until the market returns to normal. “There are always opportunities”, explains Donald Trump. “When I first started out in Manhattan, everyone was saying what a terrible market it was”. It’s a good thing he didn’t listen to anyone else’s advice or he wouldn’t be where he is today.

Many real estate experts including Donald Trump agree that now is a great time to invest in real estate and understand that pre-forecloses offer one of the best, if not the best, real estate opportunities.

The main reason to consider buying a pre-foreclosed property rather then waiting until in becomes a foreclosure property is because that way you can buy it from the current owner. This will give you more time to inspect the home as well as developing a mortgage with the bank.

It is important to understand the surrounding community or macro aspects when purchasing a pre-foreclosed home. Here are some macro aspects to consider:

  • Look around the neighborhood to see how many homes are being foreclosed. It’s best that the house you’re considering for purchase is the only one facing foreclosure. Obviously the more homes in forced sale, the more likely the properties will depreciate.
  • Ask around to find out what the average rate for rent is in the neighborhood and if it has changed lately. This will indicate if local housing demand is on the rise or not.
  • What is the local economy like at the town, local city and/or county level? Is the unemployment rate increasing or decreasing?
  • Check with local authorities to become informed about any infrastructure projects that may be planned within the next two or three years. Things such as new buildings and highways being built or corporations moving into town can be a positive indication of future growth.
  • Demographically if there is a high number of elderly people living in town who are home owners, then there could be an over supply of housing in the future, as they move in with family or nursing homes for care.

If you do your homework and find the majority of these answers to portray a positive community, then you should consider buying in that area. Buying pre-foreclosed homes at the right time in the right place can prove to be a very profitable venture.

Be Sociable, Share!

Posted under Property Auctions

This post was written by Julia Clark on March 18, 2009

Leave a Comment

Name (required)

Email (required)

Website

Comments

More Blog Post