2007-08-24 01:09:59 · 9 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
1. The owner of the house would rather sell cheap if he can sell fast, and use the money to pay off lenders, thereby salvaging what's left of his credit rating.
2. Lenders don't want portfolios of houses with weeds growing in the front yards. They drop in value quickly - and unoccupied houses attract vandals. Their business is handling cash, not handling real estate, so they are willing to sell cheap in order to sell fast.
3. If a tenant is in a financial bind, he hasn't the financial ability to perform necessary maintenance - and even if he had a little money, it wouldn't make sense to invest more money into a property that he's going to lose soon. So the house is often in terrible condition.
2007-08-24 01:26:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Most lenders want to receive the balance of a loan owed to them but they also include the costs that go with a foreclosure such as filing fees, etc. You can get some great deals this way but if you are interested in buying a foreclosure there are certain things you should know before hand.
Not all foreclosures are in need of repair, some are better than others. Some may need paint and carpet while others have holes in the wall,garage door broken, windows need screens or glass.
2007-08-24 08:27:02 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Chances are the interest rate has gone up on the mortgage taken out by the owner. The owner was able to pay his payments at the old rate of interest but when the interest rate climbed the payment climbed by an alarming amount. In some cases the owner was not able to meet the new payment amount. The owner then elects to walk away from the home and lose his investment he has put into the house. He does this because he is not able to sell the house for what he would like to get for it in order to recover his investment. The mortgage co then takes it over and can sell it for less as they have already received the previous owners payments and can therefore sell it cheaper.
2007-08-24 08:23:39 · answer #3 · answered by Steiner 6 · 0⤊ 0⤋
The fact that it is a foreclosed home generally means that the home isn't in good condition. Lenders aren't in the home selling business, they only want lend money. So getting them sold faster is the ultimate goal. Can you get a good deal? Well consider this, lenders have appraisers to appraise the property and tell them what condition it is in and what they believe would be an estimate of value based on condition. Lenders hope to recover what they lose, but not always. Lenders aren't willing to make repairs, they don't care what you the buyer thinks is a good price, they have a bottom line and if your offer isn't there, they don't accept it. Lender have a process for offers, so you the buyer aren't able to approach them directly, you need to use a Realtor in most cases. Are they sold cheaper, sure in some cases because they are in rough shape and need repair.
2007-08-24 08:41:29 · answer #4 · answered by Alterfemego 7 · 0⤊ 0⤋
It is usually sold for mortgage balance plus legal fees.
so if the homeowner bought the house for $100K, paid $6K in principal.....the mortgage balance is now $94K. So now the bank forecloses and incurrs legal and real estate listing fees of $10K....The home will sell for $104K so the bank can recoup the monies lent.
In the mean time, the value of the house is now $250K on the retail market........$104K is a cheap price.......
It's all relative to current home values.
2007-08-25 16:32:33 · answer #5 · answered by Jeffrey F 6 · 0⤊ 0⤋
a couple of reasons
The bank worried about trying to recoup its investment on the money they loaned.
they need to do this quickly becuase the longer they hold out trying to get more money it cost them becuase the money they have invested in the house is tied up and not available for other money making ventures at the bank. so the longer they dont sell it (looking for a better offer) the longer they dont have the money to make more money so in a sense they lose money
2007-08-24 08:18:50 · answer #6 · answered by Geoff C 6 · 0⤊ 0⤋
they aren't necessarily cheaper it's just that the lender is onlt interested in recooping it's costs not maximising the potential revenue for the owner, therfore the first offer which is deemed to do this will be accepted - this can be below the average market price
2007-08-24 08:15:54 · answer #7 · answered by Anonymous · 0⤊ 1⤋
Additionally, with other answers, foreclosed homes usually are in need of some repairs, reducing their original value.
Those who cannot make payments also cannot maintain the home.
2007-08-24 08:20:40 · answer #8 · answered by ed 7 · 0⤊ 0⤋
don't ask me this question!
2007-08-24 08:16:29 · answer #9 · answered by del 4 · 0⤊ 5⤋