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Friday, October 1, 2010

"Last Chance to Buy This House Before the Price Drops Dramatically!"

Houses on the Verge
(of Foreclosure)

As sales pitches go, it's not quite as lame as the infamous National Lampoon cover at right ("If You Don't Buy This Magazine, We'll Kill This Dog").

Still, you wouldn't exactly label as "enticing" a house that sought to attract Buyers with this hook: "Hurry! Act now before the home goes back to the bank!"

That's because homes that go into foreclosure typically fall dramatically in price, usually after an interval of 6-8 months off the market (and the same period of neglect).

Other disincentives: homes about to be foreclosed on frequently already suffer from neglect (who's got money for maintenance?); and, by definition, homes usually get foreclosed on when they're saddled with a too-big mortgage -- an issue that *foreclosure at least resolves.

Most Buyers, rationally, tend to run from -- not towards -- such "opportunities."

*In theory, short sales are the other way that debt-burdened homes can be relieved of some of that debt. In practice, however, banks haven't been willing to do that . . . and something like 75% of all would-be short sales progress to foreclosure.

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