If I didn't read it myself, I would almost certainly not believe it, but it's true there are foreclosed homes in the Country being sold for as little as $1000. Gasp. I ran across an article published on Yahoo with a headline that read "Radical Cheap:$1000 Homes". Naturally I am a optimist, naive almost to a fault, one of those people who wants to believe in things. So I have been working to approach things objectively, so that's what I did when I read this article, I approached it objectively. However I have to admit that after reading the title, I was hooked. Fortunately I was pleasantly surprised to learn that the title was accurate.
Now I know that the article was titled "Radical Cheap: Homes for $1000" but in Detroit there is a three-bedroom, one-bath bungalow of about 1,000 square feet listed at just $500. And that $500 is not a typo! The listing agent was interviewed for the article and claims that the home had great lighting but admitted that it needed lots of TLC. The agent continues to say that the estimated cost for rehabilitation is around $15,000-$20,000. The home sold for $72,000 in late 2007.
Here's the deal, lenders are not looking to make any money on these sales. They are all foreclosures that need to be liquidated. The longer they keep these homes in their portfolio the greater their liabilities; property taxes, and maintenance.
It actually cost the lenders to sell these homes. Typically the home is sold for literally $500-$3000 and that goes straight to the real estate agent. On top of that the lenders are supplementing the sales prices with extra money as an incentive for the agents to sell the property.
Granted these homes are probably more project than turnkey, and living in a city like Detroit may not be your cup of tea coming from Southern California, you can't beat the prices with a broom. Good investment? I don't know, time will tell. Indicative of the market's direction definitely! For homes owners this is sobering, but for investors novice and seasoned this is a great time to get in the market and make things happen. You may be saying to yourself "that's great for Detroit but what about me?" Think San Diego. Foreclosures in San Diego may not be four figures, but they are a much more solid investment. The city has a strong economy, great weather, and is still attractive.
Richard Elias is the San Diego bank owned home guru! He has made strides in the foreclosed market while other agents were still only feeling their way around.
If you have spent the last six months watching your money rise and fall, start thinking about buying real estate.
Take a moment to browse through his inventory of bank homes in San Diego. Give him a call today at 1-800-474-1919.
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