so i see the foreclosure bargains for homes they have prices like example: $48,000 -* so whats the catch with the houses being so cheap????

Asked by Inga02, Rodeo, CA Fri Feb 26, 2010

do you really by the houses for this price how does it work can you by these house with a FHA LOAN?

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Jennifer Sei…, Agent, Walnut Creek, CA
Sun Feb 28, 2010
I agree with the other agents that many times the prices you see are not from reliable sources and/or they are opening bid prices for auctions which are not typically the amount the bank will accept for the property.

That being said, there are homes for under $100k in East Contra Costa County. However most of these homes are in poor enough condition that you wouldn't be able to use an FHA loan on them. Also many of these homes are being purchased by cash investors.

If you see homes at prices that look "too good to be true", they probably are. Some agents use the tactic of putting homes on the market at artificially low prices knowing that they'll get multiple offers on the property which will drive the sales price up to the true market value. This practice can be reallydifficult for buyers who get excited about the great deal they are going to get only to be out bid by tens of thousands of dollars.

Right now the market is competitive but there are great deals out there. It's not likely you'll get a home for $48,000 but you'll find something at a great price that often times will leave you with a payment that is less than renting.

It's a great time to be buying a home. And don't forget if you are a first time buyer and you get into contract by the end of April you could qualify for up to an $8000 tax credit. That makes it an even better time to be buying.
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Barbara Wils…, Agent, Danville, CA
Sat Feb 27, 2010
Sometimes too the "price" you see is the amount that they have defaulted on the loan. Sometimes the price is a starting price for an auction, but they really have a reserve price of several hundred thousand dollars - have you ever been to an art or antiques auction? That's how they work too - start really low, and get the bidders bidding higher and higher against each other until the reserve is met. If it isn't they withdraw the property. You can buy the homes with FHA, but if you are in competition against other buyers, you often won't have the best chance of getting it, because FHA will require that certain things be repaired, and the banks won't fix them. (Though I did one where a stove was required, and the bank did put one in, but we were not in competition....)
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Don Tepper, Agent, Burke, VA
Sat Feb 27, 2010
The catch:

If they're RealtyTrac listings, the prices are incorrect. Not sure why they're permitted to put that information out, but the information is not correct. Let's leave it at that.

In some areas of the country, those are real prices. Depressed areas, like Detroit, upstate New York, and some areas of the Midwest.

In some areas of the country, properties are just cheap. Spartanburg, South Carolina, comes to mind. You can find real properties there very cheaply.

In some areas, the properties are in terrible condition, as is noted by other answers already. There are shells in Baltimore you can buy for $20,000.

In some cases, those are the real prices for manufactured or mobile homes. I sold a very nice 2 bedroom/1 bath manufactured home in a very nice community in the suburbs of Washington, D.C., for $14,000 last summer. Comparable condos were selling for $90,000. You can buy nice 3 bed/2 bath manufactured homes there for $40,000-$60,000. The first question I'd usually get was: "What's the catch with the price?" No catch. That really was the price.

To determine which of those categories the houses you're looking at fall into, find a Realtor and have the Realtor do the research.

Hope that helps.
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Gilbert Rich…, , Santa Clara County, CA
Fri Feb 26, 2010
Also be sure to use a password protected MLS search site that updates daily.
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Gilbert Rich…, , Santa Clara County, CA
Fri Feb 26, 2010
Usually they have tons of deffered maintenance and you are battling a lot of cash offers. You need a savy Loan Officer well versed in programs like the FHA 203(k), Homepath and has a resource for construction/rehab loans.

You also need a good amount of down payment to remain competitive. I hope this helps.
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Kamal Randha…, Agent, El Sobrante, CA
Fri Feb 26, 2010
Hello Inga,

Most homes prices you see on third party real estate sites do not have the accurate listing price. The price you see is the defaulted amount by the owner of the home. Most times, the owner pays that amount and continues to stay in that home. Sometimes, however, they are not able to pay and the home goes through the foreclosure process. Once the home goes through the foreclosure process, it comes back for sale at market rates. If you like, I can send you listings homes that are reliable and in your price range. No obligations. Good luck :)

Kamal Randhawa
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Dan Chase, Home Buyer, Texas City, TX
Fri Feb 26, 2010
If you are seeing a realtytrack listing forget it. Those are not real prices. They are not a price you can buy a house for.

It is possible to buy foreclosures for that price in certain areas. Some of the houses are in terrible neighborhoods. Some are in terrible physical shape. Some may just be without an owner and the bank wants to clear its books and price the house to sell quickly. Sometimes the banks put a low price on a house to encourage a bidding war to bring prices higher than they normally would go for.
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