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Why Invest In Forclosure Homes
With so many options in ways to invest in real estate, why would you want to invest in foreclosure homes? While on the surface it seems like a better idea to buy some state-of-the-art condo or country villa that you pass by on your way to work, wouldn't that same investment make more sense if you alone discovered that the property was about to be foreclosed? Of course it would because after you make the purchase you'll still have money left over to fix it up. That is why investing in forclosure homes is such a great way to go.
Many times these days you look at the asking price for the investment property of your dreams and your jaw drops. Usually it's because you can't believe the high starting price. With foreclosure homes it's usually also jaw dropping but for the opposite reason. All foreclosure homes are sold at a discount of anywhere from 10% to 15%... sometimes even more! A smart investor knows where to find the best bargains. Buy low and sell high. If that is you then foreclosure homes are a great choice.
The reason homes go into foreclosure is the homeowner defaults on the mortgage and the bank or the lender decides it's time to repossess the property. All home foreclosures are sold at public auctions. The highest bidder wins. These properties are discounted because selling the property is the most important thing to these lenders. They DO NOT want to get stuck holding a property as this surely a losing situation for them.
An example of the discounts one can expect… if the outstanding debt to a lender is $90,000 and the price quoted is $70,000 and the highest bid is $71,000 then the bidder will get the foreclosure for a 20% discount. As you can see it is always going to be less than the market price. This is why investing in foreclosure homes is a smart idea and a sound investment.
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