Purchasing a foreclosure is a great way to obtain an investment property under market value. With the recent glut of foreclosed homes which came onto the market recent years, many people have become tempted to enter the market and invest. Investing in foreclosures can certainly be profitable, but there are several tips you should follow when investing in your first foreclosure. Follow these tips to help ensure success.
Assemble Your Repair Team
Unless you will be doing repairs yourself, it is a good idea to contact repairmen before purchasing the property. This has many benefits, not the least of which is the fact that you have time to develop rapport. Depending on the charges for doing so, you may be able to take a particularly knowledgeable repairman with you to review properties before you buy, and give you an idea of the kinds of repairs they need. This simple practice will save you tons of time and money, as long as you select the right people for the job.
Obtain Financing
While many investors look to purchase a foreclosure with cash, there are many advantages to obtaining financing. Some of these advantages include extremely low interest rates, and maintaining your cash reserves in order to be able to cover unexpected expenses. Whether or not you plan to purchase the home with cash, go to a lender and get pre-qualified. This will help you know how much you can spend and keep your options as wide open as possible.
Find a Real Estate Agent with Foreclosure Experience
Real estate agents are paid by the seller of a home, so it is usually a good idea to work with one. When selecting a real estate agent it is better to work with someone who has a good deal of experience with foreclosures. The process of purchasing a foreclosed property can carry numerous challenges and delays; an experienced agent will better know how to handle such situations, and will have the patience to see the process to the end.
Be Patient to Find Your Price
As foreclosed properties are distressed assets, the actual values of the properties are subject to much interpretation. Banks frequently have no idea exactly how much a property is worth, and will often price a property too high or too low. Though banks want to unload the property, this does not mean that they will accept any offer you make. In order to find the right property at the right price, you will need to be patient. It is not advisable to make unrealistically low offers. Instead, patiently search and purchase when the right deal presents itself.
Search for Properties which didn’t Sell Quickly
One of the best ways to judge how much to offer for a property is by looking at how long the property has been on the market. The longer the property has remained unsold, the more the bank is likely to reduce the asking price. In fact, it is a good idea to search first for the properties which have been on the market for the longest. This strategy will doubtlessly yield numerous homes which are in terrible condition, but as a foreclosure investor you have to look for the deal. Perhaps there is a nice property which was under contract, but the deal fell through. There are always good deals to be found, and searching oldest first is a good way to find them.
