Foreclosures
The housing market has seen a huge onslaught of recent foreclosures, including government tax foreclosures. What that reflects of the current economy is not positive. But on the other side of that coin, what this means to you as a buyer is that it is your market.
With the national home price average down by 21% and down by 30% in big cities such as Los Angeles, San Francisco and Miami, we are surely in the midst of a buyer's market!
If you have money saved and have been waiting for the right time to strike out and buy your dream home, or to invest in real estate, now is a good time.
In addition, exploring listings of foreclosed homes may present buying options that you never imagined could be in your price range because often, foreclosure property sells at much lower than market value.
Government Foreclosures – Tax Foreclosed Properties
Many homeowners are prepared to lose their homes if they are unable to make their mortgage payments. What many homeowners are not aware of, however, is that the government can foreclose their home if they fail to pay their income or property taxes.
In these cases, the IRS places a lien on the foreclosure properties and the properties are auctioned off to the highest bidder in order to recover the amount owed in taxes.
A winning bid does not immediately translate into ownership of the home. Once the home is auctioned, the homeowner has an opportunity to pay off the tax lien in addition to mortgage payments before the court takes the next step of transferring the title of the property and ownership rights to the winning bidder.
Auctions for government tax foreclosures have a smaller selection of properties to bid on compared to other types of foreclosure auctions, but the appeal is still the same. It is common to buy government properties for a much lower price than market price, the price you would pay buying property using more traditional property buying methods.
Where to begin your listings search if you a foreclosures investor?
As an investor concerned with the increase or depreciation of the value of the properties you are buying, the best locations for buying tax and other foreclosed properties are those where there are some signs of a stable real estate market.
A wise route when investing in real estate, is to buy homes searching for foreclosure listings that are in cities with a healthy, meaning low, rate of foreclosure because rates that are too high reflect a hard hit real estate market and likely a hard hit economy in that area.
Quality of life and the local economy as well as overall growth of prices for properties versus major drops though the properties may be very cheap, are all important things to consider when searching foreclosure listings and investing.
There is a difference between very low prices due to a bad market and low prices due to greater price cutting by banks and sellers. Distinguishing the two can help you find a greatly discounted government foreclosed property in a good market.
If this information suggests anything, it is that doing your research can equate to value on many levels, at the time of purchasing foreclosure properties and for years to come. So before buying government foreclosures, tax foreclosures and other types of foreclosed property, as with any type of real estate, be sure to do your research!