What Causes homes to be in distress

The facts may be evident that in today's real estate market we can't avoid the "elephant" in the room when there's a foreclosure on your block. The first thing that runs through your mind may be -- "oh no, what happened to them, they were such good neighbors." However the circumstances came about its not a happy time for all involved. For many people wonder what causes house foreclosures? Unfortunately, there isn't a simple answer. The reasons leading up to a house foreclosure are as increasingly complex as the economy they dwell in. However, there are certainly a few common situations that either alone or in combination can cause house foreclosures in the United States: Unemployment, Property value decline, neighborhood quality decline, interest rate increase, Tax or HOA fee increase, poor money management, death or illness or divorce.

Foreclosures or "Bank-owned" properties are everywhere despite the effort to address the issue with modifications and short sales. These homes are more the likely not "turn-key" properties and there is more involved then just making and offer and paying the price tag. These homes are prepped by the bank for the conditions of standing vacant for long periods of time. If you're in the market to purchase a foreclosed property be aware that there may be upfront costs involved to purchasing a foreclosure. Some of those fees would be:

• The cost to de-weatherized and re-weatherizing the property for inspection if you are financing your purchase.
• The appraisal on the property
• The Title search (which is usually a seller cost)
• The cost of the repairs to bring it back to financable condition - which can not be done until AFTER the property closes. 
• And other closing costs that the bank may refuse to cover.

When all is said and done, foreclosures may wind up costing as much as a normal purchase but with more headaches involved. Do your research before you decide to jump into buying a foreclosed property so you're more prepared for what to expect, otherwise you may wind up being frustrated with your new home rather then being a new happy home owner.

Yvette Belisle

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