Finding Foreclosure Properties at Low-End Prices in Arizona

Finding repo properties in Arizona is never too hard as the state has one of the highest foreclosure rates in the country. Many first-time buyers flocked to the state but they seek properties in the low-end price spectrum.

The trend leaves many sellers of luxury homes struggling to compete with cheap foreclosure houses. Some were even forced to reduce the prices of their properties in order to entice investors and first-time buyers.

Residents who are responsible borrowers were spared from foreclosures brought by the collapse of subprime lending. Or so they thought. When the number of bank-owned properties hit almost 4,000 last March, many borrowers ended up owning houses that are worth less than their mortgage.

Suddenly, finding repo properties that sell at below market rate is just a walk in the park. Houses that were once sold at around $300,000 can now be had for $120,000. Similarly, houses originally valued at $200,000 are on the market for only $60,000.

Because of the below market rate, home sales in the state rose up. Many renters could not resist the unheard-of price discounts that they jumped on the bandwagon too. For the first eight months of this year, about 52,600 home sales were posted in Maricopa County, representing an increase from 35,400 for the same period a year ago.

Buying bargain-priced bank-owned houses are worth the trouble, according to industry experts. But the problem lies in finding financing to make the purchase. Financing is important especially when buying a property with a loan guaranteed by the Federal Housing Administration (FHA).

The FHA requires a down payment of 3.5 percent, lower than the 10 percent required by private lenders. Jumbo lenders require about 20 percent down payment, which buyers are finding difficult to provide.

A market study attributed the lack of sales in the high-end price spectrum to difficulties in obtaining loans valued more than $400,000. Industry experts are hoping for a federal program that will help stimulate mortgage lending and borrowing at the high-end market.

Experts said that finding foreclosure properties in the low-end price spectrum is fast becoming a thing of the past as banks are foreclosing more and more luxury houses. Furthermore, first-time homebuyers and investors are facing competition from cash-rich buyers who have the edge when it comes to getting the good deals.

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