Distressed Real Estate and Foreclosure

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Foreclosure.com Scholarship Program In existence is $150,000, specifically set aside for the purchase of distressed real estate. This essay will outline a detailed strategy ensuring a maximum return in regard to the financial investment made on the home. Including a description of distressed real estate and foreclosure in addition to how utility can play a role in the decision-making process. Distressed Real Estate and Foreclosure Distressed Purchase Collateral for the defaulted loan. Distressed real estate involves making a distressed purchase. According to Financial Crisis (2011), “[A] distressed purchase is whereby the property owners are usually in a foreclosure/short sale situation.” Foreclosure applies to a residential real estate loan in which a bank or creditor repossesses a home because of nonpayment. The institution will legally possess the right to resell the property as collateral for the defaulted loan. The selling price can be sold at a price equal to or greater than the original loan. The reason distressed properties can be bought at a lower price is the institution has already received a series of payments toward the original home loan. In many situations the lender can sell the house for a lower cost than the normal market value, leaving the buyer the opportunity to make a purchase at a lower selling price than market value and reselling the property at a profit (Demand Media, 2011). Market Value and Capital Ideal Purchase 200% profit. The market value of a specific home when purchased is $300,000 and rises over a certain time to $350,000. The individual pays more than 2/3’s of the payments before foreclosure occurs. The specifics of the foreclosure are uncertain; however, this will not affect the resale of... ... middle of paper ... ...ps occur, the home can foreclose a second time to cover the initial investment. The second foreclosure will not involve the original lender in any manner. Should one make a heuristic decision he or she will find him or herself not considering the “utility of the choice” and in the process may find his or her initial investment lost to the original lender. References Demand Media. 2011. Why are foreclosed homes less expensive. Retrieved from: http://www.ehow.com/about_6720208_foreclosed-homes-less-expensive_.html Financial Crisis. 2011. What is meant by a "distressed real estate purchase"? Retrieved from: http://www.financialcrisis2009.org/finance/Renting-Real-Estate/what-is-meant-by-a- quot-distressed-real-estate-purchase-quot-107911.htm Willingham, D. T. (2007). Cognition: The thinking animal (3rd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

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