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How to Buy Foreclosures (part 1)  

Article by Sal Vannutini

Today the Real Estate market has taken a turn for the worse. The market is poor and rates are at an all time high making it very difficult to buy or invest comfortably into a home. Buying a foreclosure home may be the right route for you.

Buying foreclosure homes have many benefits including buying foreclosure homes that are twenty, thirty, or maybe forty percent below market value. Saving thousands of dollars is a benefit that is highly appreciated by both home buyers and investors.

Though buying foreclosure homes can be a worthy investment, it may not be for everyone. A Buyer or Investor of foreclosure homes should be educated about the market or ready to conduct the research necessary. To aid in your success there are a few known steps to consider:

The first step to buying foreclosure homes is to learn the foreclosure process for your state and become educated on the different types of foreclosure. There are a few different types of foreclosure utilized within the United States. The two that are most commonly used are referred to as: foreclosure by judicial sale and foreclosure by power of sale. Foreclosure by judicial sale is the preferred and most important method of foreclosure. Foreclosure by judicial sale is used in every state and required in most.

Second, is being prepared to make the purchase. As a home buyer or investor your financing options should be clear. Before discussing purchasing options with the home owner or bank it is important to already be pre qualified for a loan or have profits to purchase the home.

The third step to buying foreclosure homes is to know your comfort level with speaking with representatives and agent, as well as knowing your negotiating skills. If you are a first time home buyer or investor it may be wise to hire an agent as your representative. Most home owners use agents to sell their home. If you are not comfortable with the idea of speaking with agents and other representatives it may be easier and most adequate to hire an agent to represent you.

Fourth, is research and doing your homework on any home you are considering. Buying foreclosure homes carry a higher risk than a traditional home for sale. Investigate each home you are considering. By carefully examining each home you can reduce your risk significantly.

The fifth step is realizing that buying foreclosure homes is not a get rich quick scam. Do not believe the hype and think that you are going to buy a foreclosure home for sixty percent below market value. Though you may be able to find some homes extremely below market value, this is not true for all homes. In most cases, home buyers and investors save 20-30% off home market value. With that said be prepared to make realistic offers on pre foreclosed homes and decent biddings on foreclosed homes. Research each home’s market value and review your financial ability.

When your financial future is at stake you want to make the best decisions you can with your money. One of the best ways to ensure a good return on your investment is by investing in foreclosures. You can find these properties for pennies on the dollar. There are so many repossessions on the market right now it is the perfect time to consider this option.

You can find many good deals just by watching the sheriff sales in the local paper. Sometimes there is a list each week which tells what the appraisal value is of the property. The sale generally asks for two thirds of the appraisal. This means a ,000 house can be bought for only ,000. This is great for an investor. You would already have equity in the home. Financing is not hard to get when you have been preapproved by the lender. This is the only way to go when you want to buy a home from the sheriff’s auction.

Investing in foreclosures can be very profitable if you do your homework first. This means making sure the property is worth the investment. You need to know if the neighborhood is up and coming or deteriorating. If the property values are falling, you should avoid the sale unless you plan on using the property as a rental unit. This means you can buy it at way below market value, rent is for a few years, and sell it for a profit when you decide to liquidate.

You must never buy properties which are offered for the same price as the appraisal. You do not want to find yourself in a position where the property can not give you a return on your investment. Most investors who have been buying and selling properties claim that buying a property for a price 50% or less of the appraised value is the only way investing in foreclosures will work.

In many cases you can find foreclosures listed with many financial companies. They are not in the business of real estate and having these properties on the books looks bad for them. The lenders need to sell the properties and are usually willing to make a deal with qualified buyers.

About the Author

Sal Vannutini is the author of ” The 8 Power Profit Secrets To Making More Money With Less Risk In Real Estate, ” a free strategy report for investors. Get your complimentary copy at www.FastFixerUpperProfits.com today.

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