Foreclosures continue to expand…

According to the website 1/4 of all houses sold last quarter were sold for less than was paid. Not only are people dumping their real estate as fast as they can, foreclosures just continue to accelerate. It seems that the government bail out plan hasn’t had an immediate effect on the problem.

If you’re interested in taking a look as some of the many foreclosure listings you can access one of the top sites on the Internet for free foreclosure listings, including foreclosed homes in all 50 states, HUD foreclosures and Washington Mutual REO properties.

Real Estate Market Near Bottom, Not Even Close

It’s difficult to see any upside to the US real estate market. Unless of course you’re a buyer. Last month it was reported that foreclosures are up a staggering 60% from the same month a year ago.

Even worse it was recently reported that housing prices have a long way down to go. One expert (The CEO of Fannie May, no less) predicts that housing prices have only fallen 30% as far as they will go. That means the pain has only just begun!

Hard to imagine real estate prices falling another 70%, but one things for sure, it’s a rough time to be a seller.

On a personal note, we recently sold one of our (non-investment) homes in Asheville, NC. We bought the house about two years ago, near the market peak. We sold it for about 20% less than we paid. Like many sellers, we were happy to have sold the domain even at a loss.

Foreclosure mess expected to get worse

Over the last several weeks numerous sources have reported that the foreclosure situation is bad and expected to get far worse.    Even in states like New Hampshire which wasn’t as effected by the real estate boom as say California,  it’s expected that 6,000 will face foreclosure this year and potentially more next year.

California is probably the hardest hit state due to the huge number of highly leveraged investor purchases.   Foreclosure Listings for California on currently number greater than 10,000.

Two questions come to mind:

Have we reached the bottom of the market?   If not, how much further down will the market go before we reach the bottom?


What effect will a government bail out have on the real estate market?

My belief is that we’re far from a bottom in real estate.   I’ve read several estimates that the market needs to correct 30% or more before we hit bottom.   The last report I saw said that prices have only dropped by <6% so far.   If that’s correct we are at the very beginning of this corrections and there’s going to be a lot more foreclosure listings before this is all said and done.

Regarding a government bailout… it’s too soon to tell.   I think it’s a horrible idea in general.  My small government feelings aside, the plan hasn’t been fully revealed so there are a lot of gaps to fill in.   It could help provide some support for housing prices, but it will certainly have unintended consequences which will likely only push the reckoning day down the road a little further.

Foreclosure Filings Nearly Double

Every month it gets worse and there’s no relief in sight as the biggest batch of adjustable rate resets are still yet to occur.   Credit markets are frozen, people are over spent and the pain has just begun to be felt.  The perceived wealth of American households is evaporating as  home foreclosures double.

Foreclosure Filings Nearly Double: Financial News – Yahoo Finance
U.S. Foreclosure Filings Nearly Double in September Over Same Month a Year Ago

It’s time to be a foreclosure investor

If you are an investor, you may already know that real estate offers many exciting areas for revenue and profits, but unless you are considering foreclosure properties as well, you may not be getting the most for your property dollar. Under current market conditions, it’s important to be a bargain hunter, and with the boom in foreclosures there’s a real opportunity for well positioned investors.

In general, a foreclosure is a real estate property that has been repossessed, usually because the owner was not able to make mortgage payments. Once the lender legally repossesses the property through a legal process known as foreclosure, the property can be sold again to investors and other property buyers. There are several sellers you can turn to for a foreclosure:

1) The government. When a home owner defaults on a home loan insured by the government, the government pays the lender for the money lost through the loan. In exchange, the lender hands the home over to the government agency and the government then sells the property in order to make up the money that has to be paid to the lender. From the government, you can buy an HUD foreclosure, a VA foreclosure, and a Fannie Mae foreclosure.

2) Banks and other lenders. When a home loan is not insured by the government, the lender has all the responsibility of a bad loan. This means that when the owner defaults, the lender repossesses the property and tries to sell it themselves or through a third party.

3) The owner. When an owner knows that foreclosure is imminent, they still have the option of selling the property as a pre foreclosure and paying off the lender. This saves their credit and may give them some cash. Buying a pre foreclosure can be risky but can also give an investor some great deals in real estate.

However you buy a foreclosure, you can expect certain benefits. Most of the time, a foreclosure is sold under it’s market value, which means that you can buy this sort of property very inexpensively. Since a foreclosure may have been neglected for a while and since the seller wants to get rid of it fast, you can expect savings of 5% to 50% and more when you buy a foreclosure. This means that you enjoy instant equity you can use right away. The low price also means that you can offer great deals on the property to your own buyers and renters. Plus, the low price and equity you get on a foreclosure can mean very affordable financing, so that you save money all around, which an boost your bottom line.

With these benefits, you may want to buy a foreclosure of your own. Don’t look in your local real estate section, though – most foreclosure properties are unadvertised. The best way to find a foreclosure is to subscribe to quality foreclosure listings service. Good foreclosure listings offer frequently updated lists of foreclosures that are available for you right now. Online home foreclosure listings such make finding a foreclosure a snap, no matter where you live. Plus, you can browse Listings for free. No registration is required, so there is no need for you to pay big bucks to make money with foreclosure properties.