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Are Foreclosures Awesome?

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Are foreclosures awesome? The guys at Think Big Work Small do.

They point to the fact that as an industry, we are dependent on homes exchanging hands.

Not only do we need homes to sell to make a living, so do lenders, inspectors, title companies, escrow companies, contractors, movers, furniture stores, appliance stores, landscapers, painters, stagers, etc..

They report that in 2005 nationwide there were 7 million home sales, most of which are assumed to have not been foreclosures, while in 2010 there were only 4.9 million sales.

Of the 4.9 million home sales in 2010, 1 million were foreclosures and another 400,000 were short sales. So only 3.5 million of the sales were traditional sales, which would be the lowest since 1981 and if adjusted for population growth would be the worst real estate market ever.

TBWS's argument is that without foreclosures there would be a significant decrease in the number of homes changing hands, which would in turn have significant negative impact on the amount of money being generated in the real estate industry and all industries associated with it.

Here in Placer County, CA we have seen the number of bank owned listings added to the market fall 66% over the past year, and while we have seen the number of short sales closing improve, closed short sales only rose 8% in July compared to last July, which does not make up for the missing bank owned homes.

This lack of foreclosure inventory has lead to a lack of inventory in general and has been responsible for increasing home values, but it has also left a tremendous amount of economically stimulating money on the table.

I can confidently say that if there were twice as many homes available for sale right now in Placer County, CA, the market could easily absorb them.

The process of losing a home to foreclosure is certainly not awesome for the homeowner losing a home.

That being said, if a bunch of new foreclosures were listed in our market or if short sales were suddenly getting listed and approved at a higher rate, it most certainly would be awesome.

Patrick Hake is a Broker Associate and team leader with RE/MAX Gold in Auburn, CA. He owns and operates the regional real estate website www.PlacerCountyHomesandLand.com and can be reached at 916-728-1981 or found on Facebook or Twitter.

Comments

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John

Is it possible for an individual to buy a foreflosed home ? It seems that investors buy everything because we can even lift a finger, how do you access the properties before the "pros" ?

phake

John-

You absolutely can purchase a foreclosure as a non-investor.

That being said, I don't know of any way to access the properties before the pros.

If you want to buy at wholesail prices at foreclosure auction or even after the properties are listed by an agent in the MLs, you will most likely need cash or have a solid pre-approval for a conventional loan with very short contingency periods (if any), a large down payment, as-is wording in the contract and a larger than normal earnest money deposit. And even then, you can expect to miss on many properites. Eventually you will get one though.

If you are willing to pay retail on a bank owned home already in good condition, you should be able to do it without having all the cash. You would be best to stick with short contingencies, a large down payment and earnest money deposit, and as-is wording in the offer.

If that fails, just find an "investor" and offer to pay them a quick return if they sell you one of the properties they pick up at auction.

They may be willing to do that to free their cash and avoid having to do work on a property.

There are lots of ways for a non-investor to buy a foreclosure. You just have to be persistent and understand that you are unlikely to get any one property, but you are likely to get a property if you keep trying.

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