Foreclosures: Good buying opportunity or not?
With the recent pick-up of foreclosure activity in the DC area, many of our clients are calling to ask if this is a buying opportunity for investment properties. It’s common knowledge that you can get a great deal in a foreclosure sale, right? The current market might prove that common knowledge isn’t always right!
In a Washington Post article on February 2nd, a foreclosure auctioneer was followed through several auctions held in northern Virginia. He stood on the front steps of the county courthouse in Prince William, and auctioned off many houses. One in Woodbridge went for $380,515. A house in Manassas went for $244,000. It was a lonely job that day - no one showed up at the auction. Not the bank, not investors, not even a curious pedestrian! The houses went to the bank for the balance of the mortgage. And therein lies the rub!
Many homes bought at the very top of the market with 90% or 100% financing are under water - in other words, the house isn’t worth what is owed to the bank. Typically, the bank will buy the home for the mortgage balance, and then hire a Realtor to sell the home at market value. In the end, the market still relies on real estate professionals to price, market, show, and finally settle these homes.
If you hear about a foreclosure on a home you are interested in, either as a new primary residence or a rental-income opportunity, please give Brandon Green Companies a call to review the different strategies available to purchase foreclosed homes.
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