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Are Foreclosures as Good a Deal as They Sound Like They Could Be?
- By Joel McDonald
- Published 10/15/2009
- General
Joel McDonald
If you're ever in the market for real estate in Boulder CO, visit Automated Homefinder.
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Anyone that is considering purchasing foreclosed property may have arrived at such considerations after hearing a real estate "guru" mentioning that there are great opportunities for those entrepreneurs looking to purchasing these foreclosed properties. Why do they stress this is such a wise option? Honestly, the reason is that these gurus are not saying anything that is untrue. Purchased a foreclosed property at an extremely discounted price truly does set the stage for a huge equity increase on the purchase. While these many real estate gurus do stress the huge potential of profitability from purchasing foreclosed property, they have a tendency to gloss over the problems associated with purchasing foreclosed property. Yes, there can be potential problems because no investment venture can be considered flawless or without potential problems.
One thing that needs to be understood about gurus is that they are not selling property. What they are selling is the vast array of marketing strategies and plans that are detailed in text publications and multimedia displays. This means that a certain conventional psychological approach must be employed in order to properly sell these items. That means the marketing of such items must include scores of mentions of how easy it is to make a great deal of money via buying and selling foreclosed properties. Many of these gurus employ an over the top methodology designed to greatly promote the sale of said educational materials. While there may be a great deal of value in these items, one should never assume that the acquisition and sale of foreclosed properties are as simple as some gurus make it sound.
What type of problems can derive from purchasing foreclosed property at a discount? Consider the following: you purchase a home at $300,000 on a foreclosure sale and it turns out the true value of the home is $500,000. Needless to say, a purchasing a home at what is essentially a 40% discount is a good deal. Yet, there is a major facet to such a purchase that many overlook: while the home may have been purchased fro $300,000, the real estate tax will be based on the home's actual value. In other words, the buyer will need to pay the real estate tax on a percentage of the $500,000 figure. Some may find this eventual revelation to be shocking and, often, they are shocked when the bill arrives because they completely did not expect it. Would this information be covered in the promotional materials that real estate sales gurus promote? More than likely, the answer is no because these gurus do not go into such depth with their material. Their material is about buying and selling and the logistics of this process are usually not explored.
Does this mean that it is best not to take the real estate gurus seriously? No, it simply means you need to take their advice - and sales material - with a grain of salt. Such gurus can be helpful but do not look at them as sole authorities on the subjects they discuss.
One thing that needs to be understood about gurus is that they are not selling property. What they are selling is the vast array of marketing strategies and plans that are detailed in text publications and multimedia displays. This means that a certain conventional psychological approach must be employed in order to properly sell these items. That means the marketing of such items must include scores of mentions of how easy it is to make a great deal of money via buying and selling foreclosed properties. Many of these gurus employ an over the top methodology designed to greatly promote the sale of said educational materials. While there may be a great deal of value in these items, one should never assume that the acquisition and sale of foreclosed properties are as simple as some gurus make it sound.
What type of problems can derive from purchasing foreclosed property at a discount? Consider the following: you purchase a home at $300,000 on a foreclosure sale and it turns out the true value of the home is $500,000. Needless to say, a purchasing a home at what is essentially a 40% discount is a good deal. Yet, there is a major facet to such a purchase that many overlook: while the home may have been purchased fro $300,000, the real estate tax will be based on the home's actual value. In other words, the buyer will need to pay the real estate tax on a percentage of the $500,000 figure. Some may find this eventual revelation to be shocking and, often, they are shocked when the bill arrives because they completely did not expect it. Would this information be covered in the promotional materials that real estate sales gurus promote? More than likely, the answer is no because these gurus do not go into such depth with their material. Their material is about buying and selling and the logistics of this process are usually not explored.
Does this mean that it is best not to take the real estate gurus seriously? No, it simply means you need to take their advice - and sales material - with a grain of salt. Such gurus can be helpful but do not look at them as sole authorities on the subjects they discuss.
