So, lets buy a foreclosure property to save money. Wait! Not so fast.

What a lot of folks don't realize is that real estate market is very much dynamic. What was true a few months ago, might not be true in today's market. And a few years in real estate market are really like a few years in the cell phone industry. Remember when Motorola Razr had just come out and it had all the "wow factor"?Well, try pulling one out now and you will have everyone in Starbucks stare at you.

Foreclosure market was really hot back in 2009 until a just a few years ago. Folks bought those properties  because they knew they could get "a deal". Lawn was all dried up, maybe holes in the walls, dirty, nasty properties. Mr. Williams bought them cheap, went it there and did some minor work and voila: he got himself a great home for under the market price. The reason they were cheap was due to a very simple fact: Supply was high and demand was low translating to low prices in real estate across the board. Lower for homes which were not in top shape like the distressed ones (shortsales and foreclosures)

Fast forward to 2016: For one reason or another  economy has picked up and interest rates are low,  demand exceeds the supply, causing prices to surge. 

The first  effect of this  low supply/high demand, is that there is lower number of distressed properties on the market. If Mr. Williams bought a house at the peak of the market and was able to toughen it out  (didn't foreclose) when market tanked , now that prices have gone back up, he can sell and move on at or above what he paid for the house. That translates to lower number of distressed properties on the market. 

The second effect of it is that if bank forecloses on a house, they contact a realtor and he will put it on the market and sell it at market price and not lower. Simply because of the law of supply and demand. So whether the seller is a bank or Mr. Williams, it doesn't really matter: property will still sell at market price and not lower. There are no deals to be had going after them.

Moral  of the story: If you are thinking that  "Instead of looking for a regular sale, I will find a foreclosure home and save a bundle" you are missing out on a lot of great homes out there.That's an old mindset which does not hold any water in today's seller market. Instead be happy that interest rates are at an all time low and home prices, even though they have gone up, are still affordable. Give me a call so we can start looking for your dream house before interest rates and prices start to rise again.