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Carrington Mortgage Holdings Executive V.P. Rick Sharga on the factors to consider before buying a foreclosed home.
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Knocking tens of thousands of dollars may be more up the price of your next home well it sounds pretty appealing right.
A slew of foreclosed homes are up for grabs the can offer huge discounts with more on where to find -- how to do it.
-- chart at executive vice president at Carrington mortgage holdings.
Rick it's always great to see you and have you want to show thanks for coming in tonight appreciate it.
Here's what I -- now here's a recent stat.
Foreclosure deals dwindling September buyers got a seven point 7% discount.
That's down from 9% last year -- -- too late to the market have I missed it already.
No there there still bargains to be had just about ever were across the country jury.
And and the good -- those discount numbers are relative you're you're still gonna find properties in a given market that have considerably higher discounts than that.
I think the folks it's -- -- are probably among the most conservative in determining foreclosure discounts and -- still a lot of opportunity for people -- -- looking for discount properties.
So let's talk about the kinds of things you think about as your picking out a foreclosure to -- You say start with sale price how to -- analyze that.
Well which one take a look at is is your average -- cost per square foot on -- property.
Certainly take a look at at comparable properties in the area for for a lot of people that means working with the local realtor can who can work them.
Through the market and show -- other properties that are more traditional properties.
I'll show them what other foreclosure properties of -- -- Shouldn't -- median -- homework is in the foreclosure market property condition is is very important.
And -- -- a lot of people end up spending more on the house and they want to because the property is -- is in good condition as they thought.
How to -- make sure I'm buying a house that's that solid.
Well one of the benefits of buying a house that's already been foreclosed on as you have a chance to inspect it.
And then we often encourage people -- to walk through the property was somebody.
Who can give them -- working estimate of what it's really going to cost to repair property in -- up to livable conditions that's one of the biggest mistakes people make when they buy -- foreclosure property.
Is -- overestimate the value -- -- underestimate dramatically how much is going to cost to fix the property up -- within like it.
Well let's face it what we thought a -- and that in a market in the worst of times.
Is it homeowners would get angry -- they were leaving they would damage the property in May be in ways that you never expected in that are difficult to financially actually take possession.
You say -- potential legal issues out there.
There are potential legal issues that there we we've seen incidents where.
People who purchased over purchase foreclosed properties only to find out that the for closing -- didn't actually have the rights to for clothes -- there were issues with paperwork that hadn't hadn't followed the transaction.
Through history of the property.
So you really do need to make sure you have have clear title on the property.
Again title insurance.
Do do again do that kind of diligence on -- property because for most of us to very.
Important financial investment we're making in in our our place to live.
They also talk about market trends location how -- analyze this stuff for the new BA can be disconcerting.
You know we we really strongly recommend that any first time home -- any anybody who's buying a foreclosure for the first time in particular.
Work with an experienced real truth can you can hadn't taken through the paces.
You do you wanna be looking at things like school districts you wanna be looking at things like crime trends.
We'll be looking to see -- property values have stopped falling which they have.
In a lot of markets were actually starting to see prices come back so those of the kinda things you wanna take a look at beyond just what the sale price of the property is.
Although price can be important obviously.
You know a lot of people make their decision on that factor alone is the price low enough but the reality is you think she's a very bad market and then take a look at contrite.
Detroit has really been down and it's here really tough place to buy housing it's cheap but the question is do you really want to buy -- how to why it how I decide.
Whether low is too low.
Yeah I was on a panel with banker at some properties in Detroit and he offered to pay me 500 dollars by take one off -- I think he was kidding I think -- was -- -- But what you were what you really wanna look at if you're home buyer looking for a place to live take a look for in the neighborhood and and ask yourself is this -- want my family to be is this a good place to raise my kids.
If you're an investor looking for property.
Look around it and get an idea what rental rates are what rental occupancy rates are is this a place that's gonna require a lot of maintenance and -- on an ongoing basis.
So again foreclosures can represent a really good value really good deal but you do need to be an educated buyer absolutely to do your home.
-- 11 final question here -- We've been talking a lot about the fiscal clip this week and I think this is critically important for anybody in the housing market right now.
I mean you could see higher taxes that could change the way you think about investing in housing.
You -- could find out that I mean you're really on the hope for a lot more money what do you telling people right now about that issue.
You know there's there's certain things we can control their certain things that we can't control.
That the government could make some.
The government could make some really disastrous decisions for the real estate market -- -- like letting the that the -- letting expire that the debt forgiveness active striving lot of short sale activity.
Mortgage tax deductions all sorts of things could go wrong.
What you look air right now is can you afford to buy property safely or you and a relatively stable job.
Because affordability levels are still are at historically.
Good numbers.
It's really good time to be on the market if you can get the financing.
And then you hope that saner heads prevail and we don't go off that fiscal cliff.
Well it is -- if you're looking for opportunity in the housing market right now is that Rick thanks for coming in tonight really appreciate your time thank you.
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