Record-high foreclosure activity means more bargains for buyers

Posted by Annalisa Burgos | May 14, 2009

Unless you’re a seasoned real estate investor, most buyers are uncomfortable with approaching a homeowner who’s going through foreclosure and offering to buy their home. Rightfully so, since it’s a very difficult time, emotionally and financially, for the homeowner.

But it’s during this first stage of foreclosure where you can find the best bargains, often through a short sale. Try these helpful tips when dealing directly with the homeowner. Negotiations require patience and tact to avoid hang-ups and slammed doors.

In RealtyTrac’s April foreclosure market report, activity is up 32 percent from last year to another record-high level, mainly due to the first two stages of foreclosure: mortgage defaults and auctions. The third stage — bank repossessions or REOs — fell to their lowest level since March 2008, but RealtyTrac’s CEO James J. Saccacio expects a spike in REOs as more loans “move through the foreclosure process over the next few months.” Not surprisingly, Nevada, Florida and California were the states with the highest rates of foreclosure.

As more homes go through the foreclosure process, more homebuyers are flooding the market in search of bargains. We already saw that in the first quarter, as increased foreclosure sales led to a 14 percent plunge in the median home price from a year earlier, the biggest drop on record, the National Association of Realtors said on Tuesday.

Did you know each state has its own laws governing foreclosures? Do your research before buying. Read about each state’s laws and stay up-to-date with the latest foreclosure news.

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