Is There Such a Thing as “Cheap Homes” Anymore?
The answer is yes, especially in today’s current financial climate. Cheap homes are in fact plentiful, and some savvy buyers seem to be cashing in. However, purchasing these cheap homes may take some effort for the rest of us and in most cases, some financial risk.
REO Homes and Foreclosed Homes
When it comes to asking prices, some of the cheapest homes on the market today are REO properties. REO (real estate owned properties) are properties owned by a bank or are foreclosed homes. Banks place the foreclosed homes on the market to recover the balance left on the home. You can purchase these homes from the bank by searching through REO listings online or you can attend a bank auction.
Beware of Escalating Costs
The problem with bank auctions, however, is if a bidding war escalates, the asking price can quickly climb up to the market price. There are several issues with paying market price for foreclosed homes. In many cases, the buyer will not have access to the property prior to the sale. If there are any problems with the plumbing, electrical, or other issues, the buyer won’t know until he’s already taken possession of the home. Repairs are quite costly, so the buyer could easily end up losing money or worse – the buyer may not even have money for repairs.
Purchasing an HUD Home
The Department of Housing and Urban Development (HUD) also offers cheap homes for sale. While the process of purchasing a HUD home is lengthy and in many ways frustrating, these homes, are in fact, some of the cheapest homes on the market at any given time. Besides having to deal with lots of red tape, HUD homes are sold as-is. This means that you may have a fixer-upper on your hands, but the prices are so low, you should be able to swing the repair costs. HUD allows the buyer to get an inspection once their offer is accepted, so the risks are somewhat minimal.
Location, Location, Location
The median average sales price of a home is $212,400. This number can decrease dramatically and it can also increase dramatically, depending on where you live. If you live in Kankakee, Illinois, finding a home for under $100,000 is quite easy. Place that same home in Manhattan, New York or Beverly Hills, California and you’re looking at a price that could very well reach into the millions or dollars.
So, is there such a thing as “cheap homes” anymore? Absolutely. All you have to do is know where to look and be willing to make a move if space is more important than the “scene.”
TIP: To buy foreclosed homes you should be an experienced buyer having purchased at least four to five homes in your lifetime; you should have pristine credit; you should double what you expect to pay in repairs and subtract the amount from your best offer; and you should always be prepared to walk away if the price begins to climb up to market rates.
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