The Low Down on Distressed Properties for Sale

By: Joseph B. Smith

Distressed properties for sale can be purchased for up to fifty percent of their market price, and therefore could be monetarily beneficial to real estate investors who buy, modernize and then lease out or resell. These properties can be especially attractive to home buyers with background in building or construction or even those who have ties to the construction industry.

What to Consider

Distressed properties for sale are occasionally known as fixer upper homes, and usually demand purchasers to make comparatively cheap repairs. Consequently, the houses can be bought at significantly reduced rates. One major consideration when it comes to distressed properties are their locations. If the master plan is to purchase these cheap houses and resell them to turn a profit then you have to play on the other strengths the property may have. Location is definitely a big come on for buyers so before committing to buy a distressed property, make sure you have scouted the neighborhood and the general area of the property. Make sure that there are business and employment opportunities as well as schools, hospitals and other social services. The level of livability is a way to strengthen the value of your distressed property and increases its chances to attract buyers.

Distressed properties for sale can either be an apartment complex, a family house or a condo. A buyer needs to be clear on what type of property they wish to purchase and renovate for resale. One can gain a lot of insights on distressed properties from an online foreclosure listings service. This service will have a comprehensive and up to date list of distressed properties across the country. If you subscribe to this service, you can design your search according to what is important to you. These sites will also compute your mortgage and provide the main contact persons you can get in touch with for your purchase. These sites will also provide education on the requirements for purchasing distressed properties for sale.

About the Author

Joseph B. Smith has been educating buyers on the finer points of distressed properties for sale at ForeclosureDeals.com for over ten years. Contact Joseph B. Smith through ForeclosureDeals.com if you need help finding information about distressed properties for sale.

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The US housing market consists of the construction, sale and resale of residential properties all across the country. In the second quarter of this year, reports have shown that there has been a decline in home building as well as the sale and resale because of the collapse in the subprime lending industry last year which was one of the factors that contributed to the current financial crisis.

This means that a lot of people have to foreclose their homes if they can’t pay the amortization. Those who have not yet lost their homes are trying to find a way to keep theirs. Individuals who are well of have to think twice before considering building a home so they don’t fall in the same situation as others are also experiencing.

Companies involved in the construction industry have to layoff some workers rather than keeping them on the payroll because they are just wasting money keeping them around when there is no work to be done.

But it is not as bad as you think. There are advantages when there is a decline in home building. The price of materials and cost of labor are much cheaper so you can do a lot with your hard earned money. Since contractors need projects to survive, you will be able to find one very easily and also get a good price.

When you hire a contractor, you should know that your home will be built at a slower pace. This is not to stiff more money from you but to make sure that it is done right. Surely, you don’t want to stay in your new home and experience some problems less than 6 months after moving in right?

One way to make sure it is done just the way you want it is that the contractor of your choice will be able to hire only the best to work on your home.

The only catch to build your dream home is that you must have money stored somewhere since you will have a hard time lending this money right now from the bank.

If you don’t have that much cash on hand to build a house, another option will be to buy one because there are a lot of foreclosed homes right now and banks would rather sell it than just keep it with them.

Just how bad is the decline in home building? A report released by the US Commerce Department reveals that in August, there was 6.2% decline so that existing built units could be sold. This is their way to restore stability between supply and demand but it is going to take more than that to change the current situation.

Some stronger remedy is needed and maybe the $700 billion bailout plan could be the answer. Will it work? Only time will tell but a lot of people hope that it does so the economy will be in good shape and we can see a construction boom in the foreseeable future.

So what should we do until that happens? Pray and just hope for the best. If things work out like what most analysts predict, we will see a recovery by the 2nd half of 2009 which means thee will be no longer a decline in home building.

The construction industry took a beating due to the financial crisis. Just how bad did home building decline? It depends where you look but overall, the numbers are very frightening.

In a report released recently, new order for homes built in the third quarter of 2008 was down 25% compared to last year. In numbers, that is 2,002 homes for this year compared to 2,660 homes in 2007.

Because of what is happening in the economy, there was increase in the number of cancellations from 24% last year to 27% this year. While real estate companies tried to curb the trend by offering it to other potential buyers, the market wasn’t biting which is why there were a lot of homes that were never sold.

In terms of home building revenues, that roughly translates to $928 million. If you think that is still good, look back at the sales performance last year and you will see that it was lower by 27%. These figures go on and on and they are really depressing.

So are companies making money? No and the worse part is that construction companies have to layoff hundreds or even thousands of workers in order to stay afloat.

If you wanted to build a home, the only way you can do that is if you have extra money flowing around right now because most banks will not able to loan that amount to you right now.

At this rate, the construction industry will only be able to produce 817,000 new homes this year compared to 1.98 million units in 2006. That is a lot and it is note expected to improve any time soon.

But are these numbers surprising? The answer is also no because it is the right reaction especially when the country is in a financial crisis.

Analysts believe this will change in the next 2 to 3 years because within this time frame, homes that were unoccupied will now have people living in them and only then will home building be once again on the upward trend.

What everyone is hoping for right now is a miracle because we are not yet out of the woods when we talk about the current financial crisis. Yes, a $700 billion bailout plan was approved and signed into law but just like Bernanke said, no one expects the recession to end overnight. It is going to take time.

Is the home building decline also happening elsewhere? In the case of Canada, the answer is no. In fact, the opposite is happening. If you were to compare the number of houses built for the month ending September this year versus last year, 6,000 more homes were built in 2008 compared to 2007.

There are many reasons for this such like more people want to settle down so they move away from the rest of their family and most importantly the program they have in place happens to be much better across the border compared to what is available in the US.

But back to reality, no one can deny that over here, there is a sharp decline in home building. The only thing anyone can do is hope for the best in the months and years ahead so we can maybe forget that this ever happened.

Workers are laid off while some construction companies go bankrupt are two things that happen when there is a decline in home building. But if you think that they are the only ones affected, think again because it creates a domino effect.

Aside from those working in the construction company, those who supply the construction materials like the lumber yards and steel mills are also affected because they will not be able to sell that much compared to the last month or even last year which is why they could pose little or no growth at all when it is time to report their corporate earnings.

On a national level, there has been an increase in the number of people who are unemployed which happens to be its highest in 7 years. Just last month, 159,000 people lost their jobs and 22% of them came from the construction industry.

Naturally, such massive job losses will affect consumer spending since people will tighten their belts even further rather than buying something they like from the store.

If a house is going to be built, the homeowner is required to get a permit. This will give him the right to build on the property and is also used by the government an indicator of future building activity. If there is a decline, cities that issue these permits will also lose a certain amount of revenue thus they will not earn that much from construction as they have done so in the past for projects that they plan.

Just to show you how bleak it is, overall permits for the month of September this year in the Midwest, South and West declined by 9.8 percent, 9.9 percent and 12.7 percent, respectively.

The only one who did well was the Northeast after a recent code change in New York City but that just offset the losses it experienced in the two previous months.

These figures are important because housing does contribute to the GDP or gross domestic product of the country and since there is a slump right now, it is only natural that it has a negative effect on the economy.

But what is surprising is the fact that the decline in home building as well as the sale or resale or homes for the first time contributed to the US recession. Back in 2000 to 2001, this was blamed on the burst of the dot-com bubble or the attacks of 9/11.

Although we recovered from that and experienced growth over the 7 year period, some say that this is normal because the recession is part of the business cycle. The economy expands, slows down and then recovers. Yes people will lose jobs and some businesses will go bankrupt.

Should only the strong survive during these trying times? No because the country has experience a recession countless times and some feel that we didn’t learn our lessons from the past which is why we are here again.

Have we learned from our mistakes? Even if the $700 billion bailout plan works, some say no because it is bound to happen again unless radical changes in the system are done. The same goes for the decline in home building because maybe we should have only made homes equal to the demand but that in reality is hard to accomplish.