Foreclosure auctions don’t give you much of a bargain, and excited investors can overbid a property. Check commercial banker’s post from a few weeks back. They also don’t get the disclosures and inspection report. The late-night informercials and books have turned daytraders into foreclosure bargain hunters, and I doubt there are any good deals at auction. In 2-3 years, when banks own the house, maybe you can get a discount. There is no easy money to be made. If anyone could really buy a house at 30% off appraised value, there would be more people doing that, driving up the auction price. The County Assessor rented a larger hall for last week’s annual lien auction, bec. so many more investors now come to them. If anyone has proof of getting a house at auction below appraised value, only then will I believe it.
Check out this from realestate.msn.com, I don’t know the date:
In the months ahead, analysts expect delinquencies to rise, putting a greater number of these foreclosures on the market for buyers to choose from. That’s bad news for owners who live in these areas, analysts say, because rising foreclosure rates typically mean falling home prices.
But it’s good news for buyers looking for some relief from the high prices of the last several years. In addition to driving neighboring home values down, foreclosures themselves tend to sell at a discount to the market, said Rick Sharga, vice president of marketing for RealtyTrac. Typically, Sharga says, buyers can shave 10% to 30% off the market price with a foreclosed home, depending on demand.
The best deals can usually be negotiated with an owner, when a property is in default, but hasn’t been put up for auction or turned over to the bank.
“Sometimes you can negotiate both ends, with the property owner and the bank,” Sharga said.
Risky business
But foreclosures don’t always mean bargain-basement prices.
“In a hot real estate market, I have seen properties sold out of foreclosure for more than the estimated market value,” Sharga said.
And there are more drawbacks and risks to buying property at auction. First of all, most buyers will need to come up with 100% of the purchase price on the day following the auction. Second, many times a property can’t be fully inspected, and in some states, the previous owner has the right to buy it back for what you paid within a certain period.
“Like any other investment, the higher the reward, the higher the level of risk,” Sharga said.
