Foreclosures abound in today’s distressed market, and virtually every segment of the income range is affected. You can buy foreclosures in Detroit for $500 if you want – although at that price they’re not much to look at. You can also buy foreclosures for 1,000 times that amount – homes that originally cost well over a million dollars.
If that last part caught your eye, it should; luxury foreclosures are growing rapidly and becoming more readily available all across the country as well-to-do homeowners gradually lose their homes too.
You could even call it a new mini-wave of foreclosures.
Take the Tampa, Florida area for example. Over the past year, hundreds of luxury homes – homes that originally cost well over a million bucks each – have hit the auction block. One condo originally priced at $1.5 million costs less than half that. Homes that originally cost $4 million are available with 75% discounts.
The same can be said elsewhere, especially in California. Super-rich homeowners are even losing their homes to foreclosure because of dwindling property values and rising mortgage payments brought about by loans taken out in 2005-2006 that are just now hitting that dreaded five-year interest rate boost.
What makes luxury and high-end foreclosures noteworthy? In short, they are much better value buys than cheaper foreclosures that often are dilapidated, neglected, stripped of all valuable parts, and abandoned. In contrast, high-end foreclosures are usually maintained, occupied, and cared for – primarily because the bank wants to retain as much value as possible for the sale of the property.
If you can get into an auction with one of these properties up for grabs, you might have a terrific deal on your hands in more ways than one. Not only will you get a good property for a fantastic discount; you will also be able to forgo tens of thousands of dollars worth of renovations to bring the home up to code and make it livable again.
We expect more luxury foreclosures to enter the market because many of the homeowners being impacted now by foreclosure took out ARMs that are coming due. They also probably had significant wealth tied into real estate – and we all know how that has turned out over the past few years. As the market tanked, so did their net worth, until they could no longer make the massive monthly mortgage payments that were required.
So, if you want to snatch up terrific properties that have a ton of value for incredible discounts, high-end foreclosures are the way to go.