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Want the best deal on a house? Buy from the bank!

February 22, 2012

If you have the money, now is the time to invest in real estate.  You have the perfect storm of low home prices mixed with low mortgage rates plus many motivated sellers.  Real estate investors or anyone that can afford to buy a home, in cash or with a mortgage, are in prime position to take advantage of today’s real estate market and get great value.

A recent survey was published by the Warren Group, an organization that collects real estate data and studies market trends, which listed towns in Massachusetts with the largest decrease in average sales price since 2005.  Topping the list was Athol, MA which experienced a 56.5% decrease in average sales price.  A house that sold for $178,000 in 2005, now sells for around $79,000.   Other more popular towns on the list were Brockton – 44% decrease; and (surprising to me) Hyannis with a 41% drop.  The average home sales price in these towns today is under $190,000 according to the Warren Group’s study.  These areas have been a hotbed for investors recently because they believe the market can’t get any lower and therefore, risk is minimal.

Why have these towns been hit so hard?  The low prices are due to the large concentration of foreclosures and bank-owned properties in these areas.

The foreclosure and bank-owned property markets are THE place to find a great deal for the lowest price.  On average, these homes sell for 30% less than a traditionally sold property.  Huge savings…However, what a buyer saves on price, he sacrifices in freedom during the sales process.  These are not properties that I would recommend considering without an adviser if you’ve never had experience in this market, especially if you’re a first-time home buyer.  The banks and their lawyers have very strict procedures that must be followed in obtaining these properties.  If you make an offer that is accepted and they’re guidelines are not adhered to, you could lose your deposit.  Further, it is not unusual that the closing date or any other contingency deadlines will need to be extended in order to resolve title issues with the property.

In short, foreclosures and bank-owned real estate should be considered if you’re looking for the most bang for your buck.  There are great deals to be had.  At the same time, this is not an area for the faint of heart.  Patience and knowledge is key to keep these deals on track.  A good real estate attorney will keep you informed and get you to the closing table as quick as possible.

One Comment leave one →
  1. January 14, 2013 1:32 pm

    Very true that buying directly from the bank can net you a very good deal.

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