You may be right. I was certainly a little surprised tonight to see that the expected closing costs for the loan (including prepaids, etc.) was $3900. However, the process seemed to go smoothly and I was certainly happy to see an investment loan of 90% LTV at a 5.25% rate.
One nice thing is that I'm currently a real estate agent, so I get 3% back on the purchase and only have to pay out 3% when I sell, so that does help cut down on the transaction costs.
I guess I'm nervous because there seem to be two classes of home sales in this market: foreclosure sales, that are generally selling between $40-60k, and owner-occupied, traditional sales, that are generally selling between $90-120k. Someone just down the street bought one of these homes for $43k a few months ago and has it on the market for $103k.
This seems a little too good to be true to me; that for some reason, people are willing to spend twice the money to avoid buying a foreclosure. I'd rather wait and rent, and see what happens with the listing down the street, then potentially sell opportunistically as needed.
I also am not seeing many deals like this one. However, I am just getting started, so we'll need to see.
Anyone else seeing this split nature in low-middle income neighborhoods, with foreclosures at one level and arms-length transactions in others?
