The collapse of the subprime market in the US has foreclosures at an all time high and the increasing rise in the number of people who are on unemployment. This has created a real estate market which is swamped with affordable foreclosures. For many this is devastating and for others this is the greatest time to get into real estate. Whether buying for the first time or making an investment you can get some great deals.
If you are getting into the real estate game of foreclosures you should always do you due diligence before you buy. Make sure you will have a free and clear title. No liens against the property. Although foreclosures are cheap you must do your homework and not overpay for the property. There are several ways you can find great deals. Find great deals through realtors, attorneys, or on your own.
Foreclosure usually starts 90 days after the borrower or homeowner has not made their mortgage payment. Homeowners may be trying to do a workout such as short sale or loan modification during this time. Investors are usually trying to capitalize on a possible purchase at a discount price.
Advantages of purchasing a property during the pre foreclosure stage would be getting the house at less than the fair market value. The homeowner may be willing to sell because of distress and possibly saving their credit rating. You can get in and inspect the property in this stage and it may be a great deal. All of this is done before the bank has taken possession of the property.
Once the bank has foreclosed on the property and taken possession of the house you'll have to deal directly with them. Many banks will sell their inventory at a discount rather than hold onto it. The banks are not in business to own property they want to loan money. The longer the bank holds these properties on their books the more it cost. They pay maintenance fees, taxes, and risk vandalism of the house being vacant; which can cost even more in damages. This is why some banks unload their inventory even if there is no profit on the sale. This can be a huge benefit to the investor or purchaser.
Another way of buying foreclosed properties is bidding at the auctions. This is a little bit more complicated and may not be the best route for the novice investor. You need to know all the rules of the auction before or you risk losing your money. You should know the value of the house, the maximum price you are willing to pay before and stick to it and not get caught up in the excitement of the auction. This method you will need cash and close quickly if you win the bid. Buying a foreclosure can be profitable but you can also lose your shirt if you are not careful. Just because a property is a foreclosure doesn't mean it is a good deal. Buyer beware is the name of the game. If this is what you want to do you should arrange your finances, attorney, appraiser, and realtor in advance. These resources will keep you out of trouble and help you get a good deal.
If you are getting into the real estate game of foreclosures you should always do you due diligence before you buy. Make sure you will have a free and clear title. No liens against the property. Although foreclosures are cheap you must do your homework and not overpay for the property. There are several ways you can find great deals. Find great deals through realtors, attorneys, or on your own.
Foreclosure usually starts 90 days after the borrower or homeowner has not made their mortgage payment. Homeowners may be trying to do a workout such as short sale or loan modification during this time. Investors are usually trying to capitalize on a possible purchase at a discount price.
Advantages of purchasing a property during the pre foreclosure stage would be getting the house at less than the fair market value. The homeowner may be willing to sell because of distress and possibly saving their credit rating. You can get in and inspect the property in this stage and it may be a great deal. All of this is done before the bank has taken possession of the property.
Once the bank has foreclosed on the property and taken possession of the house you'll have to deal directly with them. Many banks will sell their inventory at a discount rather than hold onto it. The banks are not in business to own property they want to loan money. The longer the bank holds these properties on their books the more it cost. They pay maintenance fees, taxes, and risk vandalism of the house being vacant; which can cost even more in damages. This is why some banks unload their inventory even if there is no profit on the sale. This can be a huge benefit to the investor or purchaser.
Another way of buying foreclosed properties is bidding at the auctions. This is a little bit more complicated and may not be the best route for the novice investor. You need to know all the rules of the auction before or you risk losing your money. You should know the value of the house, the maximum price you are willing to pay before and stick to it and not get caught up in the excitement of the auction. This method you will need cash and close quickly if you win the bid. Buying a foreclosure can be profitable but you can also lose your shirt if you are not careful. Just because a property is a foreclosure doesn't mean it is a good deal. Buyer beware is the name of the game. If this is what you want to do you should arrange your finances, attorney, appraiser, and realtor in advance. These resources will keep you out of trouble and help you get a good deal.
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