High-End Multi-Million Dollar Foreclosures On the Rise

As the real estate market improves and overall foreclosure numbers are falling nationwide, there is one niche segment that isn’t experiencing the same luck. If you’re in the market for a multi-million dollar property, then you may be glad to hear that homes with a value of $5 million or more saw a massive 61% increase in total foreclosures, year over year, in October.

The number of these ultra-expensive homes in the foreclosure marketplace is still relatively small in comparison to the total number of foreclosed homes, accounting for less than 2% of the 1.2 million total properties, but it may represent an interesting opportunity for investors looking for high-end properties.

Multi-Million Dollar Homes Boast Huge Discount Rates

Discount rates on foreclosures have been on the rise across the board, and high-end properties have potential for even more savings. Listings show that multi-million dollar foreclosures can go for 20% or more below list price. High-end, multi-million dollar properties are often built specifically to the original owners’ desires. These out of the ordinary, sometimes-peculiar specifications can make it difficult to sell these properties, leading to the high discount rate on these luxurious homes.

Banks Are More Willing to Take On Risk

As the banks financial stability improves, we may see an increased number of these homes on the foreclosure market.

With increased stability comes increased willingness to take on these properties, which account for large hits on a bottom line. The improving real estate market should allow banks to mitigate some losses on high-end properties, which were often avoided during the crisis. Mortgage lenders and the ultra wealthy went to extended lengths to avoid foreclosure, taking the routes of mortgage restructuring, extending payment plans, and short sales. The delinquent loans on high-end properties may have not made a payment in several years, increasing the urgency for banks to sell them, which leads to the investors savings.

Where to Find High-End Properties

If you are seeking to invest in multi-million dollar properties, there are several notable places to look.

Markets that were hit the hardest by the crisis, like Florida, have been major contributors to the increase. Foreclosures of this type also tend to pop up in major metropolitan areas. Try looking in the non-judicial foreclosure state of California, around cities such as Los Angeles.

An improving market, increased availability of these homes, and high discount rates suggests that now may be the time if you’re looking to invest in a luxurious multi-million dollar estate!