Foreclosure.com Scholarship Program
In existence is $150,000, specifically set aside for the purchase of distressed real estate. This essay will outline a detailed strategy ensuring a maximum return in regard to the financial investment made on the home. Including a description of distressed real estate and foreclosure in addition to how utility can play a role in the decision-making process.
Distressed Real Estate and Foreclosure
Distressed Purchase
Collateral for the defaulted loan. Distressed real estate involves making a distressed purchase. According to Financial Crisis (2011), “[A] distressed purchase is whereby the property owners are usually in a foreclosure/short sale situation.” Foreclosure applies to a residential real estate loan in which a bank or creditor repossesses a home because of nonpayment. The institution will legally possess the right to resell the property as collateral for the defaulted loan. The selling price can be sold at a price equal to or greater than the original loan. The reason distressed properties can be bought at a lower price is the institution has already received a series of payments toward the original home loan. In many situations the lender can sell the house for a lower cost than the normal market value, leaving the buyer the opportunity to make a purchase at a lower selling price than market value and reselling the property at a profit (Demand Media, 2011).
Market Value and Capital
Ideal Purchase
200% profit. The market value of a specific home when purchased is $300,000 and rises over a certain time to $350,000. The individual pays more than 2/3’s of the payments before foreclosure occurs. The specifics of the foreclosure are uncertain; however, this will not affect the resale of...
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...ps occur, the home can foreclose a second time to cover the initial investment. The second foreclosure will not involve the original lender in any manner. Should one make a heuristic decision he or she will find him or herself not considering the “utility of the choice” and in the process may find his or her initial investment lost to the original lender.
References
Demand Media. 2011. Why are foreclosed homes less expensive. Retrieved from:
http://www.ehow.com/about_6720208_foreclosed-homes-less-expensive_.html
Financial Crisis. 2011. What is meant by a "distressed real estate purchase"? Retrieved from:
http://www.financialcrisis2009.org/finance/Renting-Real-Estate/what-is-meant-by-a-
quot-distressed-real-estate-purchase-quot-107911.htm
Willingham, D. T. (2007). Cognition: The thinking animal (3rd ed.). Upper Saddle River, NJ:
Pearson/Prentice Hall.
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A mortgage is a form of debt, secured by the warranty of a specific real estate property. The borrower is required to pay back the debt in predetermined payments. The most common reason for acquiring a mortgage is to purchase real estate when it cannot be paid for up front. The homebuyer, in a residential mortgage, pledges their home to the bank. Over a period of years, the borrower pays back the loan with interest. Once the mortgage is paid in entirety, the owner retains the property free of any charges. However, in case of foreclosure, the bank has an entitlement on the house, as a form of insurance should the buyer default on repaying the mortgage. The bank can then sell the house, and use the capital to pay back the remaining mortgage.
They need to sell their home, but the true market value is not enough to pay the loan. Does the
Remember buyers will also do this before they show up at your door. They will have done their calculations and come up with a reasonable figure that they expect the property to go for. Overpriced homes don 't sell. In fact, they send buyers away and you house remains in the market for years without any potential buyer coming to view it.
Thus, if the borrowers failed to pay their loan the property can be auction by advertised the property to sell in public, it is the bank want to recovers the loans that given to the borrowers. The bank would be determined the offer price of the property based on the amount of loan should to recover. Hence, the offer prices of properties in auctions are lower compared to the market price. Which, the buyers will get to see the property value when an auction event held namely when many bid for the property.
Home loans, or mortgages, use a borrower's home for collateral. This home can be a single-family house up to four-unit property, as well as condominium or cooperative unit. Lenders fund home loan, but both the lender themselves and broker who act on behalf of the lenders originate.