Do you want to invest in a foreclosed home this year? You see a perfect opportunity to buy homes under market value and turn it into a real estate investment success?
2017 is a great year for finding a wealth of foreclosed homes across the States and making lots of money in turn. Foreclosed homes have been on the rise this year despite the increase in home prices and a stable housing market. Investors are vying after finding great deals on foreclosed homes that are below market value and quite affordable. The competition is intense, demand is on the rise, and investors are not quitting until they close a great deal on a discounted property in a prime location. If you are looking to get a good deal on a foreclosed home, make sure you know what you are getting yourself into and the logistics involved in closing a deal on this kind of transactions. With great competition on the rise, do not think it will be easy to score the best foreclosed homes in the best locations. It goes without saying that foreclosed homes in the best neighborhoods are the hardest to buy, and do not expect a huge discount on the price either. These highly demanded homes come at a higher selling price than other foreclosed homes in not so good areas. The law of supply and demand ladies and gents. And do not be haste; buying foreclosed homes is no easy task and is a whole different protocol from buying a generic real estate property selling at market value.
Advice on How to Buy Foreclosed Homes and Get Fantastic Deals
Find mispriced listings
To get a fantastic price on a foreclosed home, look for mispriced listings in the area of choice. Underpriced properties with a deep discount sell very quickly and investors go running after it full force. Your chances of buying highly sought after foreclosures are pretty small because just like you, many other investors want it, especially if the house is located in a prime location. Location is a key determinant of whether a property sells at a higher price and foreclosed homes are no exception. Now, if you want to beat the herd, look for properties that are little overpriced and are taking longer to sell. Why might you ask? Banks want to sell foreclosed homes and if a good offer comes to sell the property, most times they will approve your offer and sell it below the asked price. Win-win!
Do not buy before you take into account repair costs
Remember foreclosed homes sell as is, in its current condition without any repairs done to it. This is important to remember, do not be hasty in buying a really cheap house without taking into account the total cost assessment needed to repair the house. To solve this problem, hire a professional inspector to check the state of the house before you close the deal.
Find good neighborhoods in prime locations
As previously mentioned, a good location can make or break your investment property’s potential. In a nutshell, houses in prime locations reap higher returns and appreciate or increase in value over time. Location is key! Find foreclosed homes in strategic locations to make a killer profit on the property in the long term.
Pay cash (if you can)
If you want to buy the house and get the seller to approve your offer, pay cash. Banks favor cash transactions to get rid of the foreclosed homes at the soonest. Getting a loan to buy the house is time-consuming and with foreclosed homes, ‘first-come-first-served’ rule always holds.
Related: 6 Real Estate Market Trends of 2017
Buy at the end of a month, quarter, or year
Make your offer at the end of an accounting closing cycle i.e. the end of a month, quarter, or year. Banks want to clean their books at the end of each accounting cycle, thus you are at better odds to get your offer approved in those strategic times during the year. Play your cards right.
Go see the home in person
Do not buy the foreclosed home without seeing it in person. The house might be really cheap because it might require lots of repair and these hidden costs might break your profit on the house. Hire a licensed inspector to give you a thorough cost analysis on the property in question before you close any deals. Be careful on this one.
Deal directly with the listing agent
With foreclosed homes, it is always recommended to work with a listing agent, who is already in a direct relationship with the bank manager, who approves or denies the sale. If this is not an option for you, find a professional real estate agent who specializes in foreclosures and has sufficient experience in buying bank-owned assets. You want a professional on your side to help you get the right home for you. This way, you can rest assured that your investment is sure to materialize a profit.
More Tips to buying foreclosed homes
- Find an agent specializing in foreclosed homes
- Make sure your credit score can get you prequalified for a mortgage
- The seller wants a pre-approved letter from the bank first and foremost
- Study the sale prices of comparable homes in the area of choice. Mashvisor gives you a good idea of housing prices in all areas across the country
- Remember the sale is for the home as is without repair
- There is little room for negotiation
States with the Highest Number of Foreclosures in 2017
- South Carolina
- New Mexico
- New Jersey
You have a great opportunity to tap into the foreclosed homes market this year, but make sure you do not rush into buying before inspecting and assessing the repair costs for the house. The goal is to make a killer profit on the foreclosed home and reap the benefits of buying under market value.