The reality is that not everyone can afford to purchase a house in straight cash. The best option is to run into lending institutions such as banks to purchase the home through a mortgage. Time will come that some people will become unable to pay their mortgage and the bank will take over ownership to the property, called foreclosure. You can find lots of foreclosed homes in the various listing.
Sell A House That Is In Foreclosure
Little do people know is that there are lots of good deals in foreclosures. However, there are a huge amount of risks from buying foreclosed homes, especially if it is your first time buying. Dori Zinn of Bankrate provided us with some very useful expert tips in buying foreclosed properties.
5 Tips For Buying a Foreclosed Home
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When most people buy homes, they browse through home listings, use a realtor to find the perfect fit, and prepare their finances for a down payment and closing costs. Buying a foreclosed home is a little different.
“Buying a foreclosure is definitely a bit of a grind. It’s not easy,” says Robert Jensen, broker and president of the Rob Jensen Co. in Las Vegas. “You’re getting fantastic pricing, but sometimes it takes going through a lot of houses and writing a lot of offers to get the home you want.”
5 steps to buying a foreclosed home
Buying foreclosure homes is usually a much faster process than going through a normal home purchase. You might be doing multiple steps at once to keep up with it.
1. Find a real estate broker and lender
The goal of combing through foreclosure listings is not to find a house; it’s to find an agent. Banks usually hire real estate brokers to handle their REO properties, or “real estate owned.” This signifies that the property has been foreclosed on and the lender now owns it and is selling it.
In many cases, the buyer works directly with the bank’s broker instead of using a buyer’s agent. That way, the commission doesn’t have to be split between two brokers.
Elaine Zimmerman, a real estate investor and author, recommends that shoppers first visit any site with a database of foreclosed homes. You also could look at a local real estate website that lets you filter the results to see only foreclosures.
2. Get a preapproval letter
Unless you plan to pay cash, you’ll need a recent preapproval letter from a lender. The letter will detail how much money you can borrow, based on the lender’s assessment of your credit score and income.
“The problem is, buyers want to find the house first, and then they think they’ll work out the financing,” Jensen says. “But the problem is, the really good deals on these bank-owned, they go quick — and the buyer doesn’t necessarily have time to try to work out the financing afterward. They need to work that out first.” Learn more here…
The most important thing before even thinking of buying a foreclosed property is to fully understand what foreclosure is and what’s the reason why the property got foreclosed. Then you can have your way and strategy how you can seal the deal of your chosen home. Much better if you hire the services of an expert agent to help you with the decision making.
You may also find foreclosed properties in various auction sites, and Andrew Syrios of Lending Home teaches us how to find and buy foreclosed homes at an auction. Check out the tips below.
How to Buy a Foreclosed Home at an Auction in 5 Steps
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Buying a foreclosed home at an auction can be one of the most lucrative and popular ways of acquiring investment properties. But to make it work for you, you have to be aware of potential pitfalls and do your due diligence. With that in mind, let’s go over the auction process and five steps of buying a foreclosed home.
How the auction process works
When a homeowner falls behind on his or her mortgage payments, eventually the lender files the 1st Legal Action, which is either a recorded document, or a court filing, depending on the state and assigns an attorney or trustee to conduct a foreclosure. At any time prior to the auction, the borrower can reinstate the loan by paying the arrearages, or the overdue amount, but unless the borrower sells his/her home, it is rare for the delinquency to be rectified.
Real estate foreclosures usually take several months from the first missed payment until the home is sold on the courthouse steps. The exact time depends on state law and the bank foreclosing. After the 2008 financial crisis, when banks were inundated with foreclosures, it could take well over a year. But nowadays, it is usually closer to six months.
Step 1: Find homes being foreclosed
The first step in how to buy a foreclosed home is to find the properties being foreclosed on. You can find such foreclosed homes on websites such as RealtyTrac.com and Auction.com, but the best place to go is right to the source — the county records.
Step 2: Due diligence
There are several major pitfalls that you must be aware of when deciding to buy a foreclosed home. The first thing to know is that not all liens get wiped out in a foreclosure auction. In particular, tax liens stay with the property. My business partners and I once purchased a property with a $7,000 tax lien attached to it, and guess what? We had to pay it.
Step 3: Physical due diligence
One of the trickiest parts about buying at auction is that you cannot get into the property that is being foreclosed on. You should still drive by it though and take a good look at the exterior. Look online as it may have been listed recently and have pictures available. Generally speaking, the interior’s condition will mirror the exterior. That being said, you should be extra careful when coming up with your rehab budget. Read the entire article here…
Knowing how to find these great deals on foreclosure would put you on a huge advantage, whether you are a home buyer or an investor. It is also crucial to check the house thoroughly to see if major repairs are needed for it might end up eating up a huge portion of your rehabilitation budget.
The only key here is that you must know how to find incredible real estate deals, and Brandon Turner gives us some quality tips in his article at Entrepreneur.com.
4 Simple Tips for Finding Incredible Real Estate Deals
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Whether I plan to flip that house, hold the property as a rental or go for something entirely different: Everything begins with a great deal. Here are four simple tips you too can use to find better deals on your own real estate, whether you’re looking for an investment, a property for your business or simply a home for your family.
1. Consider buying a bank-foreclosed property.
When someone fails to pay a mortgage payment for an extended period of time, the lender will ultimately repossess the home and remove the occupants. Once the home is empty, the lender generally lists the house for sale on the market, using a local real estate to list it.
While the foreclosure, in itself, is of course sad (no one rejoices when someone loses a home), once the deed has been done, these properties can be some of the best deals you’ll find in real estate. Banks want to be in the business of lending money, not managing property, so they are often quick to offer large discounts just to get the deal off their books. Translation: You can get a great deal on foreclosed properties, if you know how to buy foreclosures right.
2. Be the first . . . or the last.
In real estate, often the old adage holds true: The early bird gets the worm.
Oftentimes, it’s not the highest offer for a property that gets accepted, it’s simply the first. Therefore, if you are looking for a great deal, be quick about it! Get a pre-approval from a bank so you can jump at any property right away, and have your real estate agent set you up with automatic email alerts notifying you of any new property that hits the market.
Then, don’t delay — check it out quickly, and make an offer the same day if possible.
3. Approach absentee owners privately.
In a hot real estate market, like the one most of the United States is experiencing today, great deals can be hard to find because of the large number of people looking for a home. In some areas, a single house for sale might get a dozen or more offers in the first several days. Learn more here…
The most important thing is that you must have a complete understanding of what are the criteria of a good deal house for you to succeed. Also in buying foreclosed properties, there are certain factors you must do due diligence such as the foreclosure reason, the house overall condition, etc. Remember that a severely damaged home incur huge rehabilitation cost on your part.
However, if you’re on the other side of the coin and you want to sell your property to avoid foreclosure since you don’t have the financial capibilities to pay your remaining balance, Dependable Homebuyers helps you in selling your house fast to avoid foreclosure. That way you still get the money you’ll need for your future plans without dealing foreclosure. To get started, visit https://www.dependablehomebuyers.com/foreclosure and we look forward to hearing from you.
Dependable Homebuyers
1402 Belt St, Baltimore, MD 21230
(443) 266-6247
