NYC Real Estate Market Witnesses An Alarming Spike In Mortgage Foreclosures
Here are some pros and cons of buying a foreclosed property.
As of this past October, the city’s number of mortgage foreclosures has reached a new high—with roughly 1,100 homes about to get foreclosed. The concern is, this number is not going anywhere but up. Even though the total number of foreclosures in the country has fallen by eight percent, and is seemingly on a downslide, conversely the city and Brooklyn seem to be on a foreclosure binge. Attom Data Solutions says, “… 365 cases were recorded in Brooklyn, (in October 2016) with the state overall seeing a 15 percent increase since September and 10 percent year over year.”
So, maybe now is your time to grab a property at a low cost, like back in the good old days, say, circa 2007? You remember, when about 9 million people lost their homes when the bubble finally burst because Fanny May and Freddie Mac were super greedy? Apparently, not so much. Like it usually is with buying property in the Big Apple, the competition for these homes is tougher than say, The Celebrity Apprentice, and you’re gonna need most of that in cold, hard cash. So let’s say you have the cash. What are some pros and cons of buying a foreclosed property?
Let’s start with the bad news first: Much like a sale on designer shoes in exactly your size, it may be too good to be true. There could be debts attached to the property and a lot of banks don’t want to help you out with a loan for that. Lots of foreclosures area also, “as-is” properties, which means banks won’t make the needed repairs prior to sale. There could be back taxes or even worse, liens against the foreclosed property which then you would be responsible for, not to mention a ton of legal red tape.
This process of purchasing a foreclosed property can notoriously take longer than purchasing one at market rate and that can drag on and on and … on… with many different parties to consult. Remember how we talked about the heavy competition for these under-market properties? Well, that’s a real thing, and the demand could possibly drive up costs to a point where multiple offers can come in and suddenly you’re in the middle of a bidding war. Then your bargain of an apartment, suddenly becomes not so much of a hot deal anymore.
But now for some good news: Foreclosed properties can be really, really cheap and if you do your due diligence, you could possibly wind up with your dream home that otherwise you’d never be able to afford. You could also use the fact that banks suck at selling homes to you favor. Generally speaking, banks want to sell the foreclosed properties as fast as possible and for the best price they can get in order for the to fulfill as much of the original loan debt as possible.
This means the longer the bank has had the property, the better your chances are of getting it at an extremely good price. Remember, patience is a virtue in playing cards and in real estate. Additionally, the percentage in appreciation a new buyer would make on a foreclosed property would be higher than on a similar property at market rate. This would be a nice gain to your investment portfolio if you should choose to sell the property one day at market value. So how do you find out about properties in foreclosure in your neighborhood? Check out if there’s one waiting for you on this handy website.
So, it’s a bit of a gamble when buying a foreclosed property, but the pluses can outweigh the risks if you do your research, aren’t too eager and are willing to put in a little elbow grease.
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