While it makes perfect sense to assume that a foreclosure in the South Bay should be more affordable than a non-foreclosure, not everyone constitutes a great bargain. Even if the goal is to land your next residence, a worthwhile way to gauge the value of any foreclosure is to look at it from an investor’s point of view: would the property yield worthwhile returns?
Determining that involves using some common benchmarks. Here are some of the leading factors that contribute to making a cool foreclosure evaluation:
How much did other houses sell for locally?
While the price of a property you are looking at may strike you as quite affordable, whether it represents true value is only apparent when compared with recent South Bay market trends. According to Calculated Risk, the discounts buyers are finding have begun “to drop to pre-crisis levels.” That lines up with other evidence that the foreclosure market is stabilizing as underlying home values and inventories rise. In any case, be sure to have your agent provide comps for similar properties sold in the area.
Some neighborhoods have a considerably higher foreclosures rate than others do. If the neighborhood you’re evaluating incorporates a high number of vacant properties, the price should reflect that. Such areas tend to be relatively unattractive to other buyers for a number of reasons (including a tendency toward higher crime rates). Even if you have no intention of reselling or renting out the home you are considering, the neighborhood’s character should be factored into your decision.
Cost to renovate?
While it’s hardly unusual for a foreclosure in the South Bay to need some work, the details can be decisive. Ask an appraiser to go over the property. A good one will be able to give you a close approximation of the extent of renovation you should expect.
Great deals can be found in unexpected places – sometimes it just takes the help of a great agent to uncover. If you are considering buying a South Bay home – foreclosure or not – I hope you will give me a call!
Charles Fitzgerald Butler is a Real Estate Professional in Carson, Ca, specializing in First Time Home Buyer Programs, Distressed Sales, REO Residential and Commercial properties. Charles helps homeowners develop a second income stream so they can save their homes from foreclosure.
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