Archive for category Foreclosed Properties
Foreclosure properties can be a good deal, but you have to know what you’re buying. Remember that many of these homes have been sitting vacant for months before they come up for auction and may be in need of serious repair or mold remediation. Follow the steps below to learn about buying foreclosed properties and as always call a licensed contractor to assess any renovation projects needed.
Start by learning the foreclosure auction rules for your area. State and local governments set their own rules for such things as: bidding process, amount of deposit, where the auctions are held. etc. You can learn about the process by talking to officials at your county tax department or to a Realtor.
Along with local rules there are some basic challenges that you will have to over come no matter where you are. Here are the 5 basic problems that you will face.
1. How do you find the foreclosures? Most foreclosures are still announced in local newspapers, and you can get an up to date information from you local county tax offices for example www.walton.realforeclose.com/index.cfm is one of the sites that help us see whats available. Also check out these two books that give great tips and ideas on how to buy foreclosures: Foreclosure investing for Dummies(For Dummies, 2007) and Keys to Buying Foreclosed and Bargain Homes (Barron’s Educational Series, 2008).
2. As-Is Property. You can’t get inside to inspect for structural problems. Many foreclosure auction properties are in bad shape because the owners couldn’t afford the upkeep or they were angry and purposely damaged the property to punish the lender. Walk around the home to check the exterior condition. If it’s vacant, look through the windows. Ask neighbors what they know about the property. Then remember that there’s almost always something wrong with any house sold at a foreclosure auction, so cover yourself by bidding no more than 70% of the home’s market value even if it looks perfect. Most of these homes will require renovations of some sort. That’s were we can help. If you’re in the Destin area call Roessler’s Remodeling Professionals and we can help you evaluate the renovations needed at the property, especially if it has sat vacant for any length of time.
3. What’s the Market Value of the Home? It doesn’t matter what the original mortgage was because they may have bought the home at the height of the market. The best step is to commission your real estate agent to do a BPO (broker’s price opinion) on the home you want to bid on. The BPO will show you comparable sales, telling you what similar, nearby homes that weren’t foreclosure sales have recently sold for. Bid well below those comparable sales to leave yourself room to pay for repairs and unexpected problems.
4. Are There Liens on the Property? Some auctions don’t give a clean title to the property, meaning liens from the federal government or other entities may not be removed during the foreclosure auction process. You’d have to pay off those liens if you won the property. The best way to find out is to pay a real estate attorney or an independent title search professional called an abstracter to run a title search on each property you are interested in purchasing.
Both options should be under $200.
5. How to Get the Cash Quickly? Normally you have to pay cash and pay it quickly. Don’t count on getting a mortgage that fast. Look at other sources of cash. For example: home equity lines, retirement accounts, or work with a partner to invest in foreclosed home.
By: Stephanie Roessler