The good news about buying foreclosed properties is that they usually sell at a discounted price. It’s easy to find foreclosed properties being sold at 65% to 85% of its original price. On your lucky days, you can even find properties valued at 50% of its original price!
Many of you might be thinking, what is wrong with these properties that the owners are willing to sell at a bargain? Well, there is nothing really wrong about the properties except for the want of repairs and cleaning up. Then why would the owner sell them? First, let us understand what foreclosure is. Foreclosure takes place when a debtor used his or her property as security for a loan. In the event that the debtor fails to pay the loan, the creditor can foreclose the property used as security. For banks and financial institutions, foreclosed properties are non-liquid assets. A bank or financing institution would not want to keep properties, which are non-productive, or non-income generating so they will sell them. Banks usually play by numbers, so, the more non-productive properties that a bank has, the greater the possibilities that you can get one for as low as 50% of its original price. Why? Simple, the bank needs to convert some or all of these non-productive assets into cash so that it can use it for business. Selling foreclosed properties at a bargain does not really mean a bank is losing money on the deal. Often times, the loans upon which these properties have been used as collateral are already partially paid, thus, even if the bank sells the property at a bargain, it can still realize good profit.
Jeanette Pollock is a freelance author and website owner of insideforeclosure.com. Visit Jeanette's site to learn more about foreclosure bargains.
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