Is This a Good Time To Invest In Zombie Foreclosures?
Almost every website is stating that foreclosure rates are down. Due to a steadily improving economy and better jobs, homeowners are now able to renegotiate their loans and hold on to their properties. This is good news for homeowners says Jeff Adams #1 Real Estate Trainer, but real estate investors are worried. If foreclosure rates go down, they will no longer be able to find affordable properties at bank auctions.
Does This Mean That Real Estate Investors Can No Longer Find Affordable Foreclosed Property?
No matter what industry experts say, distress sales will always be there, and banks will always be repossessing property. As a result, foreclosed properties will always be available at auction. You just have to do your research properly. Furthermore, because of the 2009 mortgage crisis, a new phenomenon has cropped up in the foreclosure sector. This unique segment of the foreclosure market is being referred to as zombie homes.
Zombie properties are nothing but foreclosed properties that owners vacated a long time back. However, due to different government rulings, legal reasons, and financial issues, banks did not find it financially viable to repossess and auction these properties. As a result, several thousand neighborhoods all over the US have thousands of zombie properties currently ‘in limbo’ with no distinct owner and no discrete plan for the future.
Why Did This Happen?
Banks had left such homes vacant as they were of low market value and the foreclosure process had stalled. As the legality was not clear, banks were not obligated to maintain these homes and most of these homes fell in to disrepair. These homes were vacant for a very long time, and squatters, drifters or drug dealers moved into these empty properties causing serious damage. Even if the homes were empty, most of these homes start to fall into disrepair due to neglect and zero maintenance.
Now the situation has changed. As banks have managed to clear out most of their repossessed properties, they are now turning towards the ‘problem child’ or ‘zombie’ houses that they still have in their inventory. According to statistics, there are more than 127,000 zombie homes still stuck in legal formalities in the US. The actual inventory may vary from state to state but zombie homes are available in the prestigious real estate markets of Los Angeles, New York and Boston.
Most of these homes are located in good neighborhoods and may draw good auction prices. By carrying out quick renovations, banks are planning to push the homes through the foreclosure process and auction them as quickly as possible to recover their investment.
Is Investing In These Properties A Good Idea for Real Estate Investors?
The average price of a zombie foreclosure was around $195,000 and this means that the properties are large and located in good neighborhoods. Jeff Adams states that it might be possible to cut into the legal paperwork to barter a short sale. However, it is absolutely necessary to evaluate the house condition before you quote a price. If you do your research properly, you could end up with a wonderful real estate property in a very good area.
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