Buying a Foreclosed Home in Buckeye

By the end of 2008, the United States experienced a record number of foreclosures throughout the country.

That year, more than 2.3 millions U.S. homeowners faced foreclosure proceedings - an 81 percent increase over the previous year. In addition, 2008 saw approximately 860,000 properties repossessed by lenders.

Among those states that experienced the highest levels of foreclosures, Arizona reported the third highest rate of foreclosures in the nation by the end of 2008, with 27 foreclosed homes for every 5,000 housing units compared to the national average of 11 foreclosures for every 5,000 housing units.

As such, Arizona has become a hotbed of sorts for those hoping to find great deals on foreclosed homes - after all, some real estate experts estimate that a homebuyer could purchase a foreclosed home for as much as 30 percent below its actual value.

Recent real estate indicators, however, have hinted that the foreclosure rate in Arizona might be receding so right now might be the best time for Arizona homebuyers to consider purchasing a foreclosed home.

About Buckeye

One of the best places in Arizona to look for foreclosure deals is Buckeye, a small town located about 35 miles west of Phoenix.

Taking pride in being Arizona's "biggest 'small town,'" Buckeye was founded in 1888 and is home to more than 20,000 residents. The town is reminiscent of the Old West, small-town lifestyle, while offering majestic views of the White Tank Mountains.

Buckeye also is home to renowned master planned community, Verrado, which made Phoenix Magazine's "Best Places to Live" list in May 2008.

This small town had boasted one of the fastest growth spurts in the nation. In July 2007, Forbes magazine ranked Buckeye as the 2nd-fastest growing municipality in the United States, noting that the town's population had grown by almost 192 percent between 2000 and 2006.

However, this rapid growth could not survive the recent burst of the real estate bubble. In fact, the town now has among the highest foreclosure rates in Maricopa County - 1 foreclosed home for every 23 housing units as of May 2009.

The town also saw a big drop in home values - as of April 2009, the median home value at dropped to $124,300, a 28.1 percent year-over-year decrease.

Ways to Buy a Foreclosed Home

For those looking to buy a foreclosed home, there are three ways to make a purchase: pre-foreclosures, foreclosure auctions and real estate-owned properties.

Considered by many to be the most appealing of the three options, pre-foreclosure homes are those properties that are on the verge of foreclosure. The home's owner has been notified by the lender of the impending foreclosure proceedings. In this scenario, many homeowners will attempt to sell the home, often far below its actual value, in order to avoid having a foreclosure go on their record. Typically, there are the least strings attached to purchasing a pre-foreclosure home because the home is not yet owned by the lender.

The second option, the foreclosure auction, typically is better suited for the real estate investor than someone who is looking for a home in which to live. Auctions often offer the best deals on foreclosed homes, but they also come with the greatest risk. When it comes to purchasing a home at a foreclosure auction, the homebuyer is not able to inspect the home in advance and must pay for the home in cash.

Real estate-owned properties, also referred to as REOs, are considered by many to be the least risky of the three options. REOs are homes that have been repossessed by the lender and are being sold by a broker. While the lender might not be willing offer the same deal as one could get from a pre-foreclosure or an auction, REO homes typically are in better shape than other foreclosed homes and are still sold well below market value.

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