Assessing the Fundamentals of Foreclosures

By: philip smith

With a glut of unsold homes in metro areas in many states, Tennessee, Illinois, Florida, Michigan for example, the buyer can be forgiven for ignoring foreclosures in his search for best value. After all, successful investing in foreclosure property requires dedication to learning about a market that is less attractive because of the general air of sorrow and decay presented by too many walled up empty homes in particular neighborhoods. In neighborhoods of low priced housing units, it can be difficult to visualise how to bring life to an investment in order to attract a new buyer in a short time frame. How do you know the property is truly a sound investment?

The difference in buying foreclosures could be said to involve three key areas. Assessing the property value as accurately as possible, cementing a deal to lock in your desired profit level on purchase, making sure the purchase fits your particular strategy and criteria. But wait a minute, couldn't that be said about all real estate investing?

Without a doubt the risk of getting it wrong is far higher with a foreclosure property. Getting an accurate assessment of required repairs is a real challenge when disclosure laws can't be enforced. Competing at auctions requires knowledge, cash, and the steel to walk away when the bidding heats up above your predetermined maximum price. Get it wrong dealing with the Bank or HUD to buy a foreclosed home and you've just paid market price anyway! Did you set your property value based on conservative appreciation rates, or did you have an element of hope that that particular neighborhood would 'come right' in time?

Offset these risks with the sure knowledge that a successful and 'safe' purchase of a foreclosure will generate equally higher rewards. Be prepared for a steep learning curve as you find out how to be sure you know the true total of the liens against a particular property. Learn where to find relevant state law indicating how much time the owner has to sell before the auction. Learn how to prepare a well received offer to the bank, how to limit 'as is' risk. Be assured that persistence will pay off. You will meet up with the owner of a property in pre foreclosure who is comfortable enough with your approach to discuss a sale that not only is the best solution for all interested parties, but also creates instant wealth for you. Teaming up with the right agent and learning the process of dealing with the bank or institutional owner will get you that real estate owned home at an excellent discount, it's just a matter of time.

Foreclosures
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Foreclosures
 



Share this article :
Click to see more related articles