When it comes to buying a foreclosure home it is important to understand the pros and cons of this type of real estate transaction. While you might be lucky enough to find a foreclosed house in perfect condition, chances are high you will need to engage in physical labor to get the property back in good condition.
Before beginning your quest for the perfect foreclosure home, it is a good idea to apply for pre-qualified home mortgage financing. Doing so ensures you are qualified to buy the property and provides extra bargaining leverage when it comes time to make an offer.
There are four ways to invest in foreclosure real estate:
1. Purchase the home through foreclosure auction
2. Buy foreclosure homes directly from the seller
3. Hire a real estate agent to bid on the foreclosed property
4. Work with an REO (real estate owned) specialist
If you have never purchased a foreclosure home it is best to work with either a realtor or REO specialist such as Simon Volkov. Working with foreclosure home specialists can provide greater negotiating power and help obtain additional benefits such as reduced closing costs or lower purchase price.
Realtors and REO specialists can help you locate foreclosure real estate more quickly than if you search for them on your own. These professionals have a wealth of knowledge at their fingertips and can quickly locate foreclosure properties in areas where you wish to reside.
If you decide to go solo, you'll want to thoroughly research the area to determine the availability of public or private schools, average property values and the anticipated property value growth in the area.
After conducting research, it's time to compile a list of potential foreclosed homes. When working with a realtor, your agent will make viewing appointments for you. If you're working alone, you will need to contact the seller to make an appointment.
Take along a pen and pad of paper so you can make note of potential problems. Check the house from top to bottom and make note of any structural damage, plumbing and heating issues, termites, rodents and other common problems. The more problems you can find, the better your bargaining power is, so take time to thoroughly investigate the foreclosure home before making an offer.
While it might be tempting to purchase a low-priced foreclosure property, it may not be your best bet. If distressed real estate requires extensive renovation it can cost significantly more than investing in a foreclosure home that has a higher price tag, but requires few repairs.
Finally, be certain to find out of there are any liens against the foreclosure home you are interested in buying. Creditor and tax liens can be a huge legal hassle that consumes a great deal of time and money to resolve. Take time to engage in due diligence before placing an offer or it could end up costing you much more than you expected.
Once you find the perfect foreclosure home and have conducted thorough research, it's time to begin negotiation with the seller or place a bid on the property. The goal is to obtain the lowest price possible. Working with a foreclosure specialist can help you waive closing costs or reduce interest rate on the home mortgage.
If you are looking for REO and foreclosure homes, Simon Volkov is a good place to start. We offer a variety of investment properties including single-dwelling, multi-dwelling and commercial real estate. Subscribe to our RSS feed or email subscription via the left sidebar to obtain instant access to our real estate investment opportunities.
Published on September 28, 2009 at 09:25 AM