In looking for a great bargain steal, many Rigby investors are seriously contemplating on buying foreclosure properties. But, in truth, the approach of purchasing a foreclosure can be a bit tricky to navigate if you’ve never actually done it before. Still and all, with a few effective tips on how to successfully buy a foreclosure property – and how to look for warning signs directing you to walk away from a deal – that way, you can add foreclosure properties to your next investment property search.
It’s crucial to note the difference between a traditional listing and a foreclosure. While traditional listings are typically homeowners or investors selling individual properties, foreclosures are properties that have been reclaimed by the lender or bank for nonpayment of the mortgage. In the case that a property has been foreclosed on, the lender will normally aim to recoup as much of the outstanding mortgage as they can by disposing of the property, selling it off, often at a price below market value.
If you are ready to begin your search for foreclosed properties, your next best move should be to hire a real estate agent who specializes in foreclosures. These real estate professionals have an in-depth knowledge of the process and the local market and will be a worthwhile source of useful advice and the latest information. Find agents with certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). These certifications suggest that the agent has fulfilled additional training in foreclosure property deals.
Aside from the right real estate agent, you must get ready and make sure that you have financing lined up and ready to go. Foreclosure deals can move very quickly, so you ought to be all set to do so, too. The most successful foreclosure buyers provide preapproval letters and other documents to the bank or lender in an attempt to demonstrate their ability to close the deal quickly. The last thing a bank aims is to sit on a valuable property a lot longer than necessary. However, they still wish to draw and gain as much as possible for it. It is a unique balance and one among the reasons why buying foreclosures could be a far more nuanced process than traditional home sales.
Even in situations where things are rapidly progressing, don’t forget to do your due diligence. Run your numbers and locate comparable properties in the area before making any offers. In very competitive markets, you may indeed be required to offer a bit more than the initial asking price to appeal to the bank or lender. In that instance, then this higher price should be included in your calculations.
Throughout this whole process, pay close attention to potential red flags. For instance, it is important to inquire closely for hidden liens on the property. It is common sense to presume that if the previous owners stopped paying their mortgage, they may have failed to pay some or all of their other debts, similarly. Unpaid property taxes and other debts can result in liens against the property that will need to be paid before the title can be transferred into your name. Another big red flag is serious repair issues or missing things.
Conceding that some cosmetic issues can be found in a foreclosed property, a lot of people may certainly have seriously neglected or even intentionally damaged the property before they are forced out by a foreclosure. Angry owners and tenants have been known to strip the house of anything of value, including copper pipes, fixtures, doorknobs, and even cabinets. According to how big the demand for rehabilitation is, you may realize later on that what looks to be a good buy may end up costing you a great deal of money to repair and rehabilitate.
Investing in foreclosed properties is a decision each investor will need to make on a case-by-case basis. Nevertheless, with the right professionals on your team and the guts to take on considerable risks, you just might truly locate and acquire an attractive bargain property that will pay out for many years to come.
Whether you decide to purchase a foreclosed home or a traditional listing in Rigby, make sure you have the right team managing your investment property. Contact us online or call 208-522-2400 and speak to a team member of Real Property Management Southeast Idaho today!
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