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Is this the right time to invest in foreclosed properties?


This question ties into the one nearby about whether to invest in things that you don’t understand. The short answer is: I have no idea. The fact that you’re asking the question suggests that you’re not connected to the real estate or banking industry or have any other sort of expertise that would provide insight into a very esoteric investment arena. The real estate market remains in the doldrums, although prices seem to have stabilized somewhat. That might be a suitable backdrop for someone who wants to buy a home to live in and pay the mortgage on for a long time. It doesn’t seem to be an auspicious time, though, for someone who wants to engage in flipping, or buying properties and turning around as quickly as possible and selling them.
For one thing, while prices are low, compared with the last several years, no one is in a hurry to buy anything. You may get stuck with a property you had no intention of hanging on to. Also, banks are not exactly rolling in dough these days, but the straitened circumstances that they found themselves in (or put themselves in) a few years ago have mostly gone. They may be less desperate to make deals and so the ones they do make are less likely to work out in your favor.
Meanwhile, the extraordinary number of foreclosures that they have had to clear off their books must have made them pretty skilled at doing it. The same goes for real estate agents and others in the property trade who may be inclined to buy and know what they’re looking for and the right price to pay. Bankers and real estate professionals aren’t known for giving a break to the uninformed little guy, so even if this turns out to be an ideal time to invest in foreclosures, your odds of success may be quite slim if you’re trying it for the first time.
-Conrad de Aenlle