7 Essential Tips for Buying Foreclosure Properties

by : Robert Lam

Just quickly, here are seven (7) tips for buying foreclosure properties...

Tip #1: Use the Internet

You can save yourself a lot of time and leg-work by using the Internet. You can search the websites of county recorders to learn of the latest notices of default (the first type of notice issued in foreclosure proceedings), and the foreclosure listing sites to see what foreclosure properties are about to be offered for sale at a public auction or trustee sale.

Tip #2: Work quickly

Once a home goes into pre-foreclosure you need to work quickly if you want to ensure that you're the person the home owner deals with. Plus, the home owner must sell their property by a certain date in order to avoid foreclosure (i.e. the home being offered for sale at a public auction or trustee sale).

Tip #3: Get your financing in place

Make sure you have your financing in place - that you are approved for the loan amount you need. This is to ensure your ability to settle on the purchase of the foreclosure without delay or the risk of losing the deal. Keep in mind that it can take 1-3 weeks to qualify for a loan.

Tip #4: Get a qualified valuation

Unless you're an expert in the area, hire a qualified valuer who is familiar with the area to value the foreclosure home you're looking to buy. Don't do the deal unless you are confident that you understand the value of the property!

Tip #5: Inspect the property

If you're buying a pre-foreclosure, it goes without saying that you should inspect the property and thoroughly assess its state of repair before purchasing it. If, on the other hand, you need to buy at auction, or to buy a real estate owned property (REO) from a bank, negotiate for the purchase to be subject to inspection.

Tip #6: Ascertain any liens, taxes or other liabilities

You don't want to buy a foreclosure only to be landed with a huge bill based on outstanding utility liens or property taxes that you weren't aware of. Don't take the home owner's word for it - do a title search and whatever other search may be warranted to identify any and all liens, taxes and other liabilities that attach to the property. You, as the new property owner, will be liable for these!

Tip #7: Have a game plan

Once you've assessed the worth of a given foreclosure property... are clear on its state of repair, and know what kind of financing you can obtain... you need to get clear on your game plan for monetizing your investment. Will you repair or renovate the home? Will you rent it out or flip it? What happens if the market drops in value (as has occurred in many parts of the country in recent times)? Do you have a Plan B? A Plan C? Whatever you do, don't do a deal without having a well-thought-out game plan.

Bonus Tip

Never stop learning and educating yourself! Foreclosure investing changes; the industry changes.

Be well equipped with real estate knowledge to make wise choices, make good offers and have a good exit plan. All of these concepts are talked about in great detail in the ebook. Continually take action and implement the ideas that you learn!