Last week, I made an offer on my first foreclosure.
In my hunt for a good buy, I’ve learned something shocking about the bank-owned real estate market.
Here’s how one real estate veteran explained it to me…
“Look Brett,” he said. “Banks aren’t real estate companies. They’re using clearing houses to move the properties. These clearing houses are a few guys in a room trying to move hundreds of properties as soon as possible. They don’t answer the phones or return e-mails. They just list the properties. If they don’t get offers, they lower the price.”[ad#Google Adsense 336×280-IA]I’ve experienced this firsthand…
I just put in an offer on a property.
It’s been on the market for about two months.
The original list price was $223,900.
After a month, the price dropped to $213,900.
And just this week, it dropped again… down to $199,900.
In just two months, the list price on this home fell 11%.
Today, it’s listed for $97 a square foot. To put that in perspective… a similar house down the street sold for over $180 a square foot in 2005. That’s almost double today’s price.
And this isn’t an isolated case…
In March, I saw the same thing happen with a similar foreclosure I was considering. That home was listed for $249,900 in December. The price fell three times in the next three months. It finally sold for $214,900… 14% below the original list price. The selling price was just $93 a square foot.
It’s clear to me… The foreclosure market is saturated. The banks are willing to clear these properties for ANY price.
That means you could get an outrageous deal if you buy right now…
The average American family could afford a $200,000 Florida home selling for roughly $100 a foot. As the housing market recovers over the next few years, this house could easily sell for closer to $300,000, or $150 per square foot.
That’s a 50% tax-free gain, if it’s your primary residence.
And it gets better…
The particular property I’m looking at is being sold through Fannie Mae. Fannie Mae apparently never learned its lesson in the mortgage debacle. It’s willing to finance this property with just a 3% down payment. In short, you could put $6,000 down… and make a $100,000 gain as the market recovers. Not bad!
Could the housing market fall farther? And could my price projections be wrong? Of course, both of my assumptions could be wrong.
But today’s price is so low, I’m certain I can make money on my housing “trade.”
If you aren’t in the market for a home… maybe you should be. This is one of the best times in history to buy.
From my experience, foreclosures are a minefield. But you only need to find one gem to get an unbelievable deal. Get out there and find it today.
That’s what I’m doing, as we speak…
–Brett Eversole[ad#jack p.s.]
Source: Daily Wealth