Three Reasons to Buy a Foreclosure Now |

If you’re in the market to buy a home, welcome to one of the best buyer’s markets in history! Home prices across the country are sharply lower than they were a couple of years ago and sellers are desperate to get out from under mortgages that have become difficult to pay for many homeowners. Over 1.5 million Americans have received at least one foreclosure notice in 2009 already, and banks are sitting on millions of dollars worth of homes that have been foreclosed on. When banks get desperate, they become very willing to make a deal.

There are several reasons why this is a more attractive time to consider buying a foreclosure than ever before. Consider these factors:

Price: Depending on the area that you’re considering buying in, some homes prices are down more than 50% from their peak in 2006 and 2007. The homes that have been foreclosed on usually trade hands at a discount even deeper than the normal market discount. The longer banks hold on to these homes, the longer they hold on to the costs associated with the properties. Banks aren’t interested in paying property taxes and maintenance costs for homes that they have taken possession of.

One recent foreclosure in Stockton, California sold as a foreclosure for $129,000 in a neighborhood where its market value was probably at least twice that high. Banks just don’t like being in the business of owning homes.

Tax Benefits: Many potential homeowners looking at foreclosures are first time home buyers, and they have some extra incentive to buy during the next few months. A tax credit for first time homebuyers of $8000 is available through November of this year, so it makes sense for these buyers to be making offers on homes available on the market today.

Demand: If you’re in the market to buy a foreclosure, you’re well aware that you’re not the only buyer out there looking for a home at a bargain price. Many REOs–industry jargon short for Real Estate Owned by banks and lenders–are purchased the same day that they become available. As a buyer, you need to know what you’re willing to spend and then watch the inventory closely because the best deals on the market are not going to last long. In fact, one California lending executive said recently that for every REO home on the market, there are ten prospective buyers.

The growing demand for foreclosures has led to a much smaller inventory than normal. REO homes on the market are down 26% from a year ago and the inventory is likely to stay limited as buyers continue bargain hunting in the foreclosure market. The inventory will also be affected by fewer foreclosures if President Obama’s foreclosure prevention plan has a positive impact and reduces foreclosures.

Buyers looking at foreclosures should let their realtor know that they’d like to look for deals on the REO market and they should be prepared to act fast. Buyers who are ready to act fast can take advantage of great deals in this market for foreclosures.