| |
| |
|
Nationalrealtyresource.com
|
| Home | Find a topic | Links | Guest Book |
| Welcome |
|
|
|
The Value of Foreclosed Property
The discount on a foreclosed property is not as great if the state allows deficiency judgments by lenders against borrowers. In contrast, the discount is larger if the property is being sold in a state that requires foreclosures to proceed through the judicial system. Lastly, appraisals seem to be more accurate for low down payment loans, leading to smaller discounts at foreclosure. Foreclosed properties may be vacant for a substantial period before they can be sold as the legal process of foreclosure runs its course. During this period, the lender's costs of holding onto a foreclosed property increases because a property that should have been generating mortgage revenue, generates none. In general, foreclosed properties sell at a substantial discount and this discount is larger when foreclosure occurs early in the loan's life. The magnitude of the discount varies by the type of house, borrower and seller attributes, loan types, time and locations. Because local governments, not the federal government, define foreclosure laws, variations in how long and how costly the foreclosure process is also has a substantial impact on the size of the discount. Any borrower who provides a small down payment can end up in a negative equity position even if prices only drop slightly thus increasing the likelihood of default and the magnitude of the losses on a default. Since defaults and losses are sensitive to down payments, especially as they become small or even approach zero, lenders are likely to be sensitive to the accuracy of the appraisal in low down payment loans. For example, appraisers provide a variety of different types of appraisals ranging from full appraisals, which include a detailed inspection of the property, housing stock, neighborhood, and available comparables to driveby appraisals and only electronic appraisals. If more accurate appraisal techniques are used on low equity loans then the value of foreclosed property should be higher for loans with smaller down payments. In addition, the behavior of the property owner prior to foreclosure (during ownership) may also have an affect on the value of the property. Not all property owners are the same. Some will more aggressively maintain the property and others will allow it to depreciate over time through a lack of maintenance. This will lead to different rates of house price appreciation and property value. The requirement of a judicial foreclosure process may lower the resale price of the property because it is vacant or rented for a longer period of time, which should increase the opportunity cost of holding the property under the lender's ownership. However, this effect is probably smaller than the effects of the right of redemption, because the new owner of the property at least has a clean title. In addition, deficiency judgment provides more power to the lender and therefore may lead to a quicker resolution of the foreclosure process, providing less time for the property to deteriorate. Again, this effect should be much less important than the right of redemption in terms of house prices and the recovery from sale. Previous research has focused on the relationship between how much of the outstanding balance on a loan is recovered and state foreclosure loans. State level foreclosure laws can also have impacts on the appreciation of foreclosed property. For instance, if a loan is foreclosed in a state that allows the borrower the right to redeem the property after paying the foreclosure expenses for up to a year after the foreclosure date the discount increases. However, the impact of foreclosure laws is different for each type of law. For instance, if a state requires that the foreclosure proceed through the judicial system the discount also increases, but the discount is smaller in states that allow the lender to recoup any losses from other assets beyond just housing. In summary, many factors impact the value of foreclosed property. The simple fact that the borrower has defaulted indicates that it generally will be sold at a substantial discount relative to similar properties. This discount is mitigated somewhat if the state allows deficiency judgments by lenders against borrowers. In contrast, the discount is increased if the property is being sold in a state that allows statuary right of redemption. Lastly, foreclosed properties tend to follow the movement of house prices in the area but in a muted fashion. For instance, if house prices in general increase by 100 percent then the sale price of foreclosed property will increase by 89 percent and any other discounts discussed above. Therefore, the discount becomes larger the more prices have increased. John Michael is the author of "Getting Started As A Real Estate Investor" "The Art Of Foreclosure Investing" "How To Do A Title Search" "Guide to Property Inspections" "Creative Investing Using Contract For Deed's". Learn how to empower yourself as an investor with this creative investor and teacher. Visit at http://jmichaelrei.com
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
FSBO - How to Prepare Your House to Sell Did you hear that? Prices of houses in Phoenix have been jumping 5% each month for 2005 according to market experts! Some even predict that the price of housing could jump an additional 10% for the upcoming year. The shortage of houses for sales and the still relatively low interest prices are causing the price of homes not just here in Phoenix but nationwide to escalate. Real Estate News Happy New Year, Make it a better world. "Pay it Forward" as in the movie. Closing Costs When Buying A Home Closing costs are often the last thing a person thinks of when buying a home. While closing is the joyous moment the home becomes yours, the costs can be surprisingly aggravating. Create a Sizzling Home Sales Flyer Did you know that the sales flyer is the most important tool in selling a house?Even if your home is listed with an agent, check the flyer that your agent has created, to see if you can jazz it up. Examine it closely, to make sure that all your amenities are listed. Listing Real Estate Online - Top Tactics for Boosting Sales Listing real estate online can be a great way to let buyers know what is out there and it gives sellers a chance to show their home to people all over the world. However, the problem lies in the fact that most people still want to tour the home, inside and out, before buying it. Stay Motivated With REI Till The Deal Comes I know many investors step into the game of real estate investing with high hopes of landing the deal that will turn their financial situation around and yes some do and this is not for you - this is for the investors still looking for that first deal!The best way starting out in this business, staying motivated and sticking to real estate investing has to do with one big factor!Keep your JOB - Yes you may be "Just Over Broke" but real estate investing comes with no guarantees of doing a deal in 30, 90, or 120 days as a matter of fact deals come and they go. real estate investing has its good times and it's bad times!You need a source of income and without it the likely hood of failure will soon follow!Having a stable income is the number one goal to having financial well being and your mental and emotional well being also. How to Get Started in the Real Estate Game Fixing and Flipping Houses If you're looking to get started investing in real estate by fixing and flipping houses, you'll want to know what to type of property to buy. Many real estate investors make millions turning ugly houses into dollhouses. How Home Buyer Rebates Work In today's tight housing market, many buyers are looking for ways to stretch their dollars far enough to make that dream home a reality. One little-known strategy that's gaining popularity with consumers is the home buyer rebate. Branded Email in the Real Estate Industry Branded Email in the Real Estate IndustryYou're in the real estate industry, and that means you've got a brand. Chances are, you've spent quite a bit of money to build that brand, whether it's through franchising fees, marketing, websites, business cards, other print materials, advertising, yard signs, and/or through other means. Zero Down Real Estate Investing Zero down? Why would a seller want to walk away from closing with nothing? Well, they wouldn't, and that brings up the most important point about real estate investing with no downpayment: The seller almost always needs cash at closing, but it doesn't have to be YOUR cash.A Zero Down ExampleI'm selling a small rental property right now, with payments of $400/month. New Home Construction - The American Dream or The American Nightmare? Buying a new home is suppose to be the American Dream. Unfortunately, for many buyers of newly constructed homes it becomes the American Nightmare. Eleven Questions to Ask in an Agent Interview Questions Sellers Should Ask in Agent Interviews:1. Is your license in good standing?You can check an agent's certification yourself with your state's department of real estate. Russ Whitney and Real Estate Investing Gurus There is curently a huge real Estate boom in America today. Little does the world know that this boom has some to do with all of the real estate guru's out there. Dramatic Profits From Preconstruction Real Estate Investing The preconstruction process is an innovative real estate investment opportunity in which you buy tomorrow's property at today's price. Preconstruction investing is a boon for the investor or buyer as well as the developer or builder. The Listing Contract: Its All in the Details Now that you've chosen a real estate professional to sell your home, you'll need to work together to complete a listing agreement. This legally binding contract authorizes a broker and his or her real estate professionals to find a buyer for your home, according to the conditions specified in the contract. Realty Agents: Don't Ask Don't Tell? Real estate stories radiate from the water cooler and cocktail parties like a brush fire out of control. Like early stages of fires, real estate transactions start out manageable, but occasionally real estate consumers fan the flames because of inexperience, and some real estate agents misplace the water buckets. Real Estate Business Starting real estate business is not that simple. Multiple aspects of stable business should be considered before you invest even 1$ in real estate. Conditions Are Right For Buying The Higher Priced Home You'Ve Always Wanted Higher interest rates and home prices in the past have kept home owners from purchasing larger homes. The current real estate market conditions, however, are encouraging for many home owners who want to "buy up" to higher priced homes with more to offer. Condos Vs. Condo Hotels For Vacaton Home Ownership Condo hotels, also called condotels, are a relatively new concept in vacation home ownership. Rapidly gaining popularity, numerous condo hotels are now being built in Florida, Las Vegas, Chicago, Toronto, the Caribbean and many other locales around the U. Home Selection Checklist - A Good Aid When Choosing a Home This home selection checklist is a tool to help you select a home that is right for you and your family. Before you select a home and get a mortgage, you need to know if you will be happy with the home you select for the coming years.
|
| |
| |
|
Home | Guest Book |Site Map | Recommended Resources | Search Powered By: TJTMEDIA |
| © 2006 |
