Buying a foreclosure home can be a profitable real estate investment. However, investors must take time to weigh the pros and cons of purchasing distressed properties. Nearly all foreclosure properties require some level of repair before the home can be resold or rented.
Locating the perfect foreclosure home will require endless hours of searching MLS databases and viewing properties. Unless buying houses with cash, investors must obtain preapproved financing before placing bids on foreclosure properties.
Four primary options exist for buying foreclosed real estate. The most popular is to purchase properties through foreclosure auctions. While investors can buy houses below market value, buying from auctions can lead to frustration.
When houses are sold through auction, investors are responsible for removing creditor and tax liens. These can amount to several thousand dollars and oftentimes cannot be negotiated. Foreclosure homes are sold as-is and most require substantial repair or renovation. Another drawback of foreclosure homes is sometimes evicted homeowners refuse to leave. Investors are responsible for eviction, which can be costly and dramatic.
Less stressful options for buying foreclosure real estate include: buying directly from the seller via a short sale transaction; hiring realtors to locate bank owned foreclosures or short sale properties; working with bank foreclosure specialists.
Those unfamiliar with the process of buying foreclosure homes should work with a realtor or foreclosure specialist. Working with trained specialists can help investors obtain reduced prices and can aide in reducing closing costs.
Real estate agents and bank foreclosure specialists have a wealth of information at their fingertips. They can help real estate investors locate a foreclosure home more quickly than if they were to search properties on their own. Additionally, specialists can help investors locate properties in the areas where they wish to invest in rental homes.
Investors who elect to locate foreclosure homes without assistance should take time to research comparative sales reports and real estate market conditions. It is smart to determine the availability of public and private schools, property values, and anticipated growth of the area.
Should you decide to seek out foreclosure homes without the assistance of others, you will want to thoroughly research the area. Determine the availability of public and private schools, average property values and the anticipated value growth in the area.
Novice real estate investors often make the mistake of being intoxicated by low-priced foreclosure homes. It is important to realize if a property requires extensive repairs the restoration costs can quickly deplete any profit margin. Investing in properties which are priced higher but require fewer repairs might be a better option.
Bank owned foreclosure homes are properties owned by mortgage lenders. When real estate goes unsold at public auction it is returned to the lender. Once banks regain ownership they remove creditor judgments and tax liens and the property is sold with a clean title.
Buying bank owned properties can be a lengthy process, but can yield a profitable investment property. Investors must work with bank loss mitigators to negotiate the sale price and close the deal.
One good source for locating discounted Fannie Mae foreclosure homes is Home Path Mortgage. In addition to selling discounted real estate, Home Path offers special financing offers for home buyers and investors. Qualified applicants might be eligible for Neighborhood Stabilization Program grants offered through the Department of Housing and Urban Development.
Many options exist for locating quality real estate at discounted prices. Investors who take time to conduct research or network with other investors can find money-saving strategies to improve their return on investment.
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