Smart Hints to Successful Buying of Bank Owned Foreclosures

Bank owned foreclosures refer to those that have reverted to the bank’s ownership after a public sale. These properties can range from single units to multi-family units, condominiums, apartments, townhouses, duplexes and other types of structures. Once these properties become REOs or bank owned, they will be listed as for sale usually through listings provider or real estate brokers. Although you can choose from a wide selection of properties from a foreclosures list, it is still important to take note of the following guides to ensure that your investment is adequately protected and remains an asset rather than a liability.

Always Inspect The Property

Inspection of the property is very important. The photographs showing a property’s facade or any of its angles will not compensate for a thorough, personal inspection. Photos will not show the leaks, broken tiles, smashed windows, molds, and other repairs that are needed to be done on the property. A licensed home inspector can help you assess the damage and state of the property as well as give you a written estimate of the repairs that should be done on the property.

An ocular inspection will not only provide you a firsthand knowledge of the current state of bank owned foreclosures but give you a glimpse of the type of neighborhood surrounding them as well. You may also ask a few questions from the people in the neighborhood about their personal experiences in living in the area and other questions which would give you a clearer picture of what to expect. The information that you will gather from a house visit should help you in formulating your decisions later.

Research The Title

Once you have found a property that you are interested in, do a title search. You may want to search the public records to see if there are any outstanding debts, liens or judgment on the property. Any annotation should give you an idea that the property may still have to satisfy a money debt. You do not want to buy a property for which you would have to pay twice the amount as you would have paid for one with a clean, good title. If the property has any outstanding tax or property liens, you may have to pay for them before you can have the title.

Negotiate With The Bank

Although banks necessarily want as much amount as they can gather from a property to recover any of their losses, they can still be open for negotiations especially if the subject property is one which has been on the market for too long. Normally, banks are flexible when it comes to bank owned foreclosures that are in need of major repairs. If you are one who can manage a fixer upper property and a remodeling project either for resale or rental, then negotiating with the bank can give you a favorable outcome.

Distressed Properties Sale: Buying Tips

If you are looking for investments in the real estate market that will double your money, consider buying at distressed properties sale. So, why is a property that has been foreclosed because its owner failed to pay for its monthly mortgages a good investment? It is because a foreclosed property is sold cheaply. For a small amount you can buy your own house, which you can either live in, rent to other people or fix and resell.

Where to Look for Distressed Properties:

Many homeowners who have fallen into bad times and found themselves unable to continue to pay for the monthly mortgage of their properties are willing to sell them instead of waiting for lenders to repossess them. And because they are in a hurry to dispose their properties to avoid foreclosure, they would sell their homes way below the current market value to attract buyers.

If you are interested in buying at distressed properties sale, better arrange your finances first before you approach the owner. There are several advantages of organizing your finances before making an offer. For one, you will know how far you can go when negotiating for the price of the property. Another advantage is, it will give you a leverage during negotiations as the owner would be more inclined to sell to you the property if he sees that you have the ready money.

Some Factors to Consider Before Closing a Deal:

Just because you have found a cheap foreclosure property to buy, it does not mean that you will grab it immediately without taking some steps to make sure that you are getting a good deal. A distressed homeowner who is desperate to sell his house before it goes into foreclosure would opt to withhold any information he deems would turn the buyer away. He knows that information, such as hidden liens, unpaid taxes and major structural damage, can affect his chances of selling his property.

Be aware of these pitfalls so that you will not be left with a property that is more of a headache than a good investment. Buying at distressed properties sale is a good deal only to people who practice due diligence.

Buying a Foreclosure – Separating Good Deals From Bad Deals

There hardly seems to be a day where you do not see stories in the newspaper or on TV about the foreclosure opportunities in just about every real estate market. While there are certainly wonderful deals to be had in almost every city, there are also properties listed for sale that are not great deals. Here are some tips to make sure that you are getting the best deal when buying a foreclosure:

Understand the process in your area: There are different ways to buy a foreclosure home, and the process can vary greatly from area to area. The first thing a prospective buyer should do before signing on the dotted line is research the process in their area.

Know what you are buying: Make sure to negotiate in plenty of time to do a full inspection of the property and have a way out of the contract. Because the former owner is not there to tell you the history of the home, you need to get a professional to look it over so that you can uncover any major defects that need repair. Be mindful, however, that most banks are not going to be willing to do repairs to a foreclosed home.

Know your highest offer: Formulate your highest offer and stick to it. By coming up with your best offer, you can negotiate accordingly without fear of going too high in price range.

It is true that there are some wonderful deals to be had in the real estate marketplace right now, but buyers must be careful not to act too fast or get too excited over one particular house. This can lead to making mistakes, and no one wants to do that when investing in real estate because it is such a large financial transaction.

Exit Strategies When Buying a Pre Foreclosure Part I

It seems like it’s not important knowing your exit strategy (what you’re going to do with your pre foreclosure house after you get your offer accepted) when you first sit down to share your pre foreclosure information to the seller and before they even sign the purchase contract. But that’s not so.

Important Pre Foreclosure information after the acceptance

What you’re going to do with that pre foreclosure real estate is as important now as it will be when you do get the offer accepted by the bank.

– If you buy the house, where will you get the money?

– If you borrow the money, how much cheaper do I have to get the house to pay the interest back?

– Are you going to lease/rent or sell the property after the rehab?

– Are you going to do the repairs?

– If you don’t want to do the repairs, who will?

– Do you have a list of people who would be interested in buying the house if you’re not?

– Where would you find people who would buy the house if you don’t?

All these are important questions and you need to be thinking about them the whole time you work on the pre foreclosure lead. Once the offer is accepted, you usually have 30 days to close the deal. So time is of the essence.

If you have most of these questions answered and the pieces in place, it’s a lot easier.

We’ll take them one at a time.

1. Yes, you’re going to buy the pre foreclosure home and do the repairs yourself. And you don’t have any money, but you do have experience in doing rehab.

Buying pre foreclosure homes is a great way to build your portfolio of properties and build your net worth. You could get the money from a private lender, a hard money lender or a mortgage company.

Using a Private Lender when Buying a Pre Foreclosure Short Sale

A private lender could be someone in your family or circle of friends who know you’ve done some rehab, are interested in increasing their own income and believes in you. They may loan you the money for 8% because they are currently only getting 4.5% in a money market account. Great Deal!

You’ll just show them their money will be safe via a first mortgage on the property and you are buying it less that 70% of the after repaired value (ARV) or after it’s fixed up value and fair market value for the neighborhood.

They can lend you the cash outright or from their self-directed IRA (more on that later) where the money becomes non-taxable.

Using a hard money Lender when buying a pre foreclosure

A hard money lender charges a higher interest rate and usually points upfront. (Each point is 1% (percent) of the amount of the loan). They may or may not look at your credit, but usually don’t want this to be your first deal. They want you to have experience in doing rehabs and buying property, making them feel more secure when they don’t know you. They normally don’t ask for a credit report. They are lending because there is equity in the property and they will foreclosure on the property if you don’t make your payments.

Another way to build confidence with your lender is by giving even more pre foreclosure information. Sign a deed up front with your private lender giving the property rights back to your lender if you do default. The deed can be kept I an attorney or Title Company’s escrow account it its needed.

Giving your lender options demonstrates you want to ensure his investment is safe is a great way to keep them wanting to lend you more money!

Buying Foreclosed Homes – Be Careful of the Great Deal

Unless you have been living under a rock for the last couple of years, you have probably heard that the economy and real estate market have been in a bit of a bind. People are losing their jobs and homes are foreclosing at a rapid rate. While this is a very sad and unfortunate situation for thousands of people each month, it is also an unbelievable opportunity for people buying foreclosed homes. The deals to be had amazing, but you have to know where to look and what to avoid.

One of the first things you need to make sure about is the actual value of the home. Just because a home has been foreclosed upon does not mean that it is necessarily a good deal. Sometimes the real estate agent or the bank decides to list the home at fair market value for awhile before reducing it down to a really good deal. Be sure to look at comparable sold properties within the last 3 to 6 months. This will help you gauge what the market really is doing since there have been a lot of changes recently.

You also want to make sure that you do a thorough inspection of the property. Nothing is more upsetting to a new home buyer than to find out after closing that the property needs a lot of repair work done. That can cost thousands of dollars depending on what the issues are, so it needs to be uncovered early in the process when the buyer can still get out of the contract without penalties.

When buying foreclosed homes, it is important not to get swept up in the excitement of getting a good deal. Instead, buyers should keep a cool head about them and make sure they do as much due diligence as possible.