Buying a Foreclosed Home in Paradise Valley

In 2008, more than 2.3 million homeowners faced foreclosure proceedings in the United States, representing an 81 percent increase over 2007. In all, approximately 860,000 properties were repossessed by lenders that year.

Arizona was among the handful of states that helped drive this incredibly high foreclosure rate. The state was ranked the third highest for foreclosures, recording 27 foreclosures for every 5,000 housing units, well above the national average of 11 foreclosures for every 5,000 housing units.

Although the foreclosure rate in Arizona has decreased considerably since then, many prospective homebuyers can still find great deals in the market.

About Paradise Valley

Among the many cities where one might find a great foreclosure deal is the Town of Paradise Valley.

Paradise Valley is a small but well-established town located just nine miles northeast of Phoenix, Arizona. Covering approximately 16 square miles, the town is nestled between the cities of Phoenix and Scottsdale, with Camelback and Mummy mountains as majestic backdrops.

With a continuously growing population, Paradise Valley is quickly becoming a major city, and is no longer known for its modest size. The town also is known for the affluence boasted by those who live there. The median household income for Paradise Valley in 2007 was more than $181,000 - 263 percent greater than the median household income for the stat.

As of April 2009, the estimated median home value was just over $1.1 million, and while that average price tag might not scream "deal," it does represent a 29.3 percent year-over-year decline, according to real estate web site Zillow.com.

How to Buy a Foreclosed Home

When it comes to foreclosures, there are three primary ways one can go about purchasing a foreclosed home:

• Pre-Foreclosures: Possibly the most appealing of the three options, purchasing a pre-foreclosure home generally comes with the least amount of burden on the part of the homebuyer because the home is still owned by the original homeowner and not the lender.
• Foreclosure Auctions: Often scouted by investors versus potential homeowners, auctions carry the greatest risk but can result in the greatest deals. When a foreclosed home is auctioned, the homeowner is unable to inspect the property in advance and must be able to pay for the home in cash.
• Real Estate-Owned Properties: Also referred to as REOs, this type of foreclosed home is the least risky of the three options, but often does not yield the same types of deals one could get from a pre-foreclosure or an auction. A REO home essentially is owned by the lender and is being marketed by a broker.

What to Consider When Buying a Foreclosed Home

Purchasing a foreclosed home is not an easy proposition - there are significantly more legal considerations than when buying a standard home, which is why it is important for homebuyers looking to buy a foreclosed home to do plenty of research beforehand.

Many real estate experts recommend hiring a real estate agent who specialized in foreclosures simply because of all of the legal considerations tied to a foreclosure purchase.

A prime example of an issue that could catch an unwitting homebuyer by surprise is any unknown liens against the home for unpaid property taxes - in most cases, the new homeowner would be responsible for taking care of any liens against the property.

An experienced real estate agent would know to conduct a thorough title search prior to purchasing a home to check for such liens as well as a possible undisclosed second mortgage, for which the homebuyer also would be responsible.

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