The sub-prime mortgage fiasco is providing what is probably a once in a lifetime opportunity for buyers! The market is flush with foreclosed properties right now. They may also be called bank owned properties, REO's (real estate owned) or corporate owned properties. The important thing for you to know is that these properties are usually heavily discounted to encourage a quick sale. Banks are not in the business of owning real estate. As long as they own the property they must continue to pay the taxes and the expensive insurance to protect the property. A vacant property may continue to deteriorate by neglect or vandalism. They want to get rid of this property quickly so that they can get back to the business of being bankers. They'll often sell it cheap to make a quick sale, and their loss can be your gain!
There is another type of opportunity out there called a short sale. A short sale is when the owner needs to sell his property but real estate prices have fallen and now he owes more on his mortgage than the property is worth. He offers his property for sale at a price that is lower (sometimes much lower) than the amount he owes on his mortgage. In this type of deal a buyer may be able to purchase the property for this discounted price as long as the bank agrees to accept the discounted price. The bank may write off the loss or may require the original owner to be liable for the loss. Either way, you may walk away with a great bargain!
Large numbers of foreclosed and short sale properties being offered at deeply discounted prices have put a lot of downward pressure on the rest of the real estate market. This pressure has forced the rest of the market to lower their prices in order to compete for a sale. Many properties are being offered at a 30% or even a 40% discount to the prices that they may have been offered at as recently as two years ago. There are short sales and foreclosures that may be had for 60%, 70% or sometimes even 80% less than they sold for just a couple of years ago! The best deals are often snapped up by bargain hunters within days of being listed, so when you find the deal of your dreams don't hesitate to make an offer!