It’s a sad fact of life that, even in the Saline real estate market, many people have lost their homes through bank foreclosure.
According to RealtyTrac; a website that logs foreclosure filings, foreclosure rates continue to rise in most of the top 100 largest metropolitan areas of the country.
The effects of foreclosure have spread beyond the delinquent borrower. The losses had a chain reaction from the defaulting borrower, to the lender and the investors. The foreclosure process costs the lenders thousands in losses through legal fees and taxes due until the property is sold. Not to mention the lost equity when the house is priced to sell in a weak market. We’ve seen the news that many of the major financial institutions (such as Citigroup, Bank of America, Morgan Stanley and Merrill Lynch) have reported billions in losses on investments backed by mortgages. You can read one of these reports here.
On a wider scale, even those who have not, or will not, default in their payment were affected. Foreclosure raises the risk of fire, vandalism, theft and other crimes not only in the vacant foreclosed homes but in the surrounding houses, streets and neighborhoods. Here is an article that discussed how the mortgage meltdown sparked a crime wave in one of the areas hardest hit by foreclosure.
When you combine an increase in inventories of foreclosed houses for sale with the typically lower-than-market value sale price of foreclosures, the result is that it weakens the local housing markets. It pulls down the value of other nearby homes and sometimes the whole neighborhood. Buying a foreclosed property in an area known for a lot of foreclosures doesn't leave much room for capital growth, if an investor is planning to flip it.
Remember, although there are many opportunities available in foreclosed properties, not all foreclosures present an opportunity for successful investment. Do your own research. Check the foreclosure statistics in the area. How did the foreclosures in the area affect the neighborhood? Did it increase the crime rate in the area? Are there any developments or job growth that can affect the area's future capital growth potential? Be aware of any indicators that can further dampen the house prices and look out for genuine bargains that can be a potential gold mine.
If you’re considering an investment in a foreclosed home in the Saline real estate market, you owe it to yourself to explore the risks and rewards first. I’d be happy to share what I’ve learned through my experience. Just give me a call at (734) 476-2063, or send an e-mail, “Vance (at) SalineMichiganRealEstate.com”.