Do you want to get a foreclosed property and flip it for a profit? Or do you have your eyes on a bargain foreclosure in the right side of town for you and your family? Whatever your motives, purchasing a foreclosure can be a good investment or a costly mistake. Although some foreclosures may be a steal, selling 30 to 40 percent below their market value, they frequently include hidden surprises.
Research, Research, Research
Spend as much time as you can afford in researching before you purchase a foreclosure. Even though there are deals to be found, it’s not going to be simple. First you need a list of foreclosures in your area; assess at homesales.gov for foreclosures owned by government agencies, or make use of a personal listing bureau (see Resources). Learn who owns the property (the citizen, the creditor or a trustee), and what stage of foreclosure the house is in. Check for back taxes and other liens that might be attached to the property. You may discover a lot of information in the local courthouse and county records office. Inspect the home, if at all possible, before attending a foreclosure auction or talking about prices to the proprietor. Foreclosure homes frequently are behind in basic maintenance, which can be something you want to consider when pricing your bid.
Get the Financing
Decide how much you can spend on the foreclosure. If you’re using your own savings, decide how much you are able to part with; never invest money you can’t afford to lose. If you’re going to use a mortgage, then attempt to get preapproved with your creditor. Occasionally lenders and auction agents want to see proof you’ve got the required financial backing. Figure out all of the costs involved, including minimum deposit at auctions, closing costs, down payment, insurance and taxes.
Hire a Pro
Buying a home is a severe financial decision, but purchasing a foreclosure is more complex. Foreclosures need more paperwork along with a great comprehension of the market and property law. Employ a seasoned agent if you’re a newcomer to foreclosure sales, so you can learn the ropes using a professional by your side.
Create an Offer
This step will vary, depending on the phase of foreclosure the home is in. In the event the house is in preforeclosure, the current owner of the house can sell the house to pay off the loan. If your research tells you the house is a good investment, then make the owner a deal. This is frequently a win-win-win for the owner, creditor and you, because the owner avoids the negative ramifications of a foreclosure, the creditor receives his cash (or part of it), and you get your bargain (you trust ). If the foreclosure is set for a foreclosure action, attend the auction and bid for the property. You’ll need to sign up for the auction on the day of this sale and pay the deposit to rush. Decide what your maximum bid ought to be and stick to your decision; don’t get sucked in by your emotions in the auction area. In the event the owner is now a bank, mortgage lender or investor, contact the new owner and make a deal. Lenders aren’t usually in the business of purchasing and selling houses, are generally happy to save money and time using a fast resale.