It is wise to be suspicious of homes priced under market value. In some areas, which are hit hard by foreclosure, it can be difficult to tell if you are looking at real home prices or fake prices, but keep in mind banks are known to underprice homes on purpose. There may be more than you think to artificially low prices.
You will often find home prices that seem too good to be true.
Before getting excited, ask your real estate agent why the homes are priced so far below market value.
Homes priced under market value include:
These properties have been seized by the bank. The properties are on the market because no one wanted to pay the bank's price at the courthouse and the bids were lowball offers. The price advertised may simply be the opening bid for an auction, which typically raises the price to market value. When the bank prices a foreclosure below market value, it is a strategy to encourage several offers and drive up the price further.
As they say, the number one rule in real estate is location, location, location. A home in a bad location will often have a low price, including property near commercial zones or a freeway.
The bottom line is you should realize that there is probably a good reason the home is priced so low, and it may not be the deal you think.