Market downturn could be a boon to baby boomers
By Chandra Orr
Copley News Service
Don't think you can afford to retire in Nevada, California or Florida? Think again.
Foreclosures are up nearly 100 percent from just a year ago, and the sunbelt states top the list, according to a recent U.S. Foreclosure Market Report produced by RealtyTrac Inc.
"The real estate market is really taking a strong downturn, so right now is a hot time to buy a home," said real estate specialist Danielle Babb, co-author of "Finding Foreclosures: An Insider's Guide to Cashing in on This Hidden Market," (Entrepreneur Press, $21.95).
Some banks and lending companies will take a mere 40 cents on the dollar to recoup their losses on a loan, but nationwide, the average buyoff on foreclosed homes hovers right around 65 cents on the dollar, Babb said.
It still adds up to a pretty good deal. Snagging a $100,000 home for a mere $65,000 makes quite a difference when retirement lurks just around the corner.
"The baby boomers are the only group right now that actually has substantial equity in their homes," Babb said. "If you take that equity out now and buy a home while the prices are low, you'll be in a really good position when you're ready to retire. Plus, you'll be building equity on your new home in the meantime."
If you're ready to make the move, consider the following resources for finding a great deal on your dream retirement home:
- RealtyTrac Inc., www.realtytrac.com
RealtyTrac features the largest national database of pre-foreclosure, foreclosure, for-sale-by-owner and new home construction properties.
"This is a great way to find pre-foreclosures, when homeowners are significantly late on their mortgage payments," Babb said. "You can get a good deal because most distressed homeowners don't want a foreclosure on their record."
For about $50 a month, subscribers can search more than 550,000 properties nationwide and take advantage of the site's extensive forms, articles and how-to instructions on buying distressed properties.
- U.S. Department of Housing and Urban Development (HUD), www.homesales.gov
For the best deals on foreclosed homes, skip the middle man. The HomeSales.gov web site provides listings of single family homes for sale by the federal government.
Most are for sale by public auction, but buyers must work with a real estate agent or broker to place bids.
"You can make bids and buy homes online. There's no middle man because the homes are government-owned - and the government does not want to own homes," Babb said.
These aren't new homes, but rather pre-owned homes purchased through government programs like HUD, USDA/Rural Development and Veterans Affairs. Properties in foreclosure can range from mobile homes to high-end houses in retirement associations. The service is free.
- Downey Savings, www.downeysavings.com
In addition to a range of mortgage services, including first-time home buyer programs and no-money-down financing, Downey Savings offers foreclosed properties to the public. The listings include single-family homes, condos and townhouses in Arizona and California. In most cases, Downey Savings will finance the purchase of their properties with minimal or no loan fees.
For more information, call Downey Savings at 1-800-897-4234 during normal business hours.
- Builder bargains
It's not a foreclosure, but it is one of the best housing deals around right now.
When a buyer backs out of a contract on a newly built home at the last minute, it leaves the builder in a bind. But, for those willing act quickly and play hardball, this can mean big savings on some of the hottest new properties. In general, homebuilders place a 20 percent markup on new properties, which means buyers have 20 percent to negotiate with because builders are often eager to just recoup their initial investment.
"If they say they will sell the home for $700,000, but you let them know you only have $550,000, most of the time they will take the money and be very happy," Babb said.
"Oftentimes you're buying a house that's been fairly well upgraded. Those are the houses that they really slash the prices on," Babb said. "It might have $375,000 worth of upgrades, but you get the upgrades for free."
Check out K. Hovnanian Housing (www.khov.com), Standard Pacific Homes (www.standardpacifichomes.com) and John Laing Homes (www.johnlainghomes.com) for homes in the sunbelt states.
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