Buying Foreclosures in St. George Utah. A foreclosure is basically when someone had bought a house, they put a down payment and they had a 30-year or 15-year long mortgage with the bank and so every month they should have been making payments to the bank. But something happened in their life where they stopped making those payments. Banks can be ruthless and unforgiving because they've got all this money hanging out there and so if you go long enough without making payments, banks will say, "Hey, we have the legal right to foreclose on you." That means that we're taking the property back. If you paid the property half down, you're out of luck. We get all the benefits that might be left in this or we're screwed with whatever downside we're going to pick up.
Bottom line is a foreclosure is when a property goes back to the bank, The bank has to find a way to now offload this home to somebody else. Banks want to get their money and they know they're not always going to win. They're not always the most intelligent in how they get rid of these things and the reason why foreclosure is such a buzzword is because often banks will offload a house at a big discount just to get it off the books because it's a bad debt that is hampering and hurting their ratios on their ability to lend and make money. So if they got a bad deal, they want to toss it to somebody else and that makes an opportunity for guys like you and me.
3 Tips to buying foreclosures in St. George Utah
A good rule to follow is don't buy properties over the median. In your area, there is an average level at which people buy homes and I'm not going to talk about the difference between average and median. Let's just actually go with this very basic math. Nationwide, the median right now in 2019 is around $220,000. That means that under 220,000 between 180k and 220,000 it represents the most people that want to buy a property.
But when you go over the median, let's call it a $300,000 all of a sudden the number of people that can buy that is much smaller. Take it to the extreme, a $10 million home. How many people are in the market for $10 million home? All of a sudden you can start counting on fingers. It's not in swaths of thousands or tens of thousands of people like there are underneath the median.
So there is a place for foreclosures. They can be done the right way. Rule 2 is I prefer a lease option to flip any day of the week. Putting pressure on a property to have to be sold in a short time means that things don't always work out the way that you want.
If you're going to do a foreclosure, you need to have a way of actually verifying the equity that is in it, which means you've got to get a good deal on it. Just because it's a foreclosure doesn't mean you're getting a good deal. You should talk to a realtor and have them perform a CMA, a comparable market analysis to say, Hey, the bank is offering it for me at this price and we think it's worth that price and you need a standard. How much equity do you want if you're buying a foreclosure because sometimes in hot markets homes will sell at, or in some weird times, even above what they're worth? You want to make sure that you're locking in the equity that you want.