Free Home Foreclosures
The real estate market is so bad today that you can actually get homes for free. Places such as Detroit have been hit so hard that you could pick up a home foreclosure for basically free. The only catch is that it is going to cost you more money to rehab it than you could sell it for once it is all rehabbed. It might even cost you more to demolish the house and get rid of the rubble than it would to sell the vacant lot.
Banks are basically giving away free home foreclosures, because just holding onto the property increases their risk and comes with carrying costs such as property taxes and insurance. I took a look at some bank owned listings in the Detroit area and I found several hundred home foreclosures that were being sold with the asking price of one dollar.
Why are areas like this hit so hard? Well, first off, housing prices around the entire country have dropped substantially. Second, some areas experienced huge job losses and many people moved out of the area. Take Detroit for example. Because of the hit the auto industry took, they cut thousands of jobs, and thus thousands of people had to move out of the area to find work. This creates a huge increase in vacancies, so now the number of available units far exceeds the number of people who are available to rent, buy or otherwise occupy these units.
When an area like this gets so depressed, it seems to snowball and continue getting out of hand. Since there are so many properties available for sale and nobody wanting to jump into the housing market, sellers are having to under-cut each other’s prices just to make their properties more attractive and possibly even be able to sell them. As the price for houses in good condition fall dramatically, the prices for houses in poor condition fall even harder. If you can grab a house in decent condition for 15k, why would you buy a fixer upper for any price if it is going to cost you $20k to bring it up to a livable condition?
Since regular housing is already so cheap, the prices for properties in disrepair are hitting lows of, well free! The market has become so depressed that the prices are bottoming out at zero. Does this mean it is an absolute bottom, or can prices go below free?
So, if someone tells you that they picked up a free home foreclosure, or a property for only a few hundred bucks, be wary. It might end up costing them money to unload the property!