Buying Homes on the Cheap: How Much Do You Know About Foreclosures?

By: Bambi Turner

Buying Homes on the Cheap: How Much Do You Know About Foreclosures?
Image: Joe Raedle/Staff/Getty Images News/Getty Images

About This Quiz

It seems today like you can't drive through a neighborhood -- regardless what part of the country you're in -- without seeing at least a few bank-owned properties for sale. But while it's never good news when people can't afford to stay in their homes, foreclosures aren't all bad. They also represent a chance for buyers and investors to score great deals on properties. Take our quiz to see how much you know about foreclosures, real estate and the home-buying process!
How many homes in the U.S. were undergoing foreclosure at the start of 2012?
one in 23,514
one in 8,765
one in 563
At the start of 2012, one in every 563 homes was undergoing foreclosure.

Advertisement

Which state had the highest rate of foreclosures as of late 2011?
New York
Florida
Nevada
Nevada had the highest rate of foreclosure for 58 straight months through the end of 2011.

Advertisement

How many homes underwent foreclosure in 2011?
500,000
750,000
1.2 million
About 1.2 million homes were repossessed in 2011, up from 1 million in 2010.

Advertisement

Who is the largest owner of foreclosed properties in the U.S.?
federal government
The federal government is the largest owner of foreclosed properties in the U.S.
banks
J.P. Morgan Chase

Advertisement

How much should you plan to spend on owner's title insurance when buying a foreclosed property?
about 0.5 percent of the purchase price
An investment of 0.5 percent of the purchase price can save major headaches in terms of title issues.
about 5 percent of the purchase price
about 15 percent of the purchase price

Advertisement

What name is given to foreclosed properties owned by banks?
real estate owned (REO)
Foreclosures owned by the banks are known as REOs.
real estate investment (REI)
real estate foreclosure (REF)

Advertisement

What's the best way to find out about liens against a foreclosed property before you buy?
read the contract
a title search
The best way to learn about title issues and liens is to invest in a title search.
ask the former owner

Advertisement

How many buyers manage to persuade banks to fix problems found during the inspection of a foreclosed property?
25 percent
About 25 percent of buyers convince banks to fix problems with the property, while the other 75 percent are forced to purchase the home as is.
75 percent
99 percent

Advertisement

True or false: Banks are required to disclose any problems with a foreclosed property prior to sale.
true
false
Banks are exempt from many disclosure laws when it comes to foreclosure sales.
It depends on the state.

Advertisement

How much do experts suggest that buyers budget for repairs when buying a foreclosed home?
5 percent of the purchase price
10 percent of the purchase price
Most sources suggest budgeting an extra 10 percent for repairs when purchasing a foreclosed property.
25 percent of the purchase price

Advertisement

What term describes a pre-foreclosure sale where the bank accepts an offer below the value of the loan?
short sale
When a pre-foreclosure property is sold for less than the value of its loans, it is referred to as a short sale.
long sale
owner sale

Advertisement

What's the minimum price that a lender can accept for an FHA-backed foreclosure property?
88 percent of list price
Lenders are not permitted to accept less than 88 percent of the list price for an FHA-backed property during its first 30 days on the market.
75 percent of list price
66 percent of list price

Advertisement

What percentage of home sales did foreclosed properties represent during 2011?
10 percent
25 percent
Foreclosures represented about 25 percent of all home sales during 2011.
40 percent

Advertisement

What was the average purchase price for conventional, non-foreclosed homes in 2011?
$159,000
$209,000
$259,000
The average conventional home sold for $259,000 in 2011.

Advertisement

How much did the average distressed, or “fixer-upper,” foreclosure sell for in 2011?
$199,000
$159,000
$99,000
The average fixer-upper foreclosure sold for $99,000 in 2011.

Advertisement

How much did the average REO, or bank-owned foreclosure, sell for in 2011?
$99,000
$190,000
The average bank-owned foreclosure sold for $190,000 in 2011.
$240,000

Advertisement

What was the average cost of a short sale property in 2011?
$159,000
$209,000
The average short sale sold for $209,000 in 2011.
$289,000

Advertisement

What percentage of home sales in 2011 were short sales?
12 percent
About 12 of homes sold in 2011 were short sales.
18 percent
26 percent

Advertisement

How much of a discount do buyers get on average when purchasing a foreclosure?
10 percent
16 percent
28 percent
The average foreclosure property sells for 28 percent below list price.

Advertisement

Prior to the housing crisis of the early 21st century, what percentage of annual home sales did foreclosures represent each year?
10 percent
Traditionally, foreclosures represent just 10 percent of home sales in the U.S.
15 percent
20 percent

Advertisement

You Got:
/20
Joe Raedle/Staff/Getty Images News/Getty Images

Featured