November 20th, 2007 12:05 PM by Lehel Szucs
Foreclosure are increasing and brewing up a hot market for investors and buyers. To get the best deal possible, here are a few tips:
1. Timing is everything. Borrowers often are given a chance to avoid foreclosure with a grace period, typically two to three months, to pay off the amount they owe. The borrower may opt to sell the property during this pre-foreclosure stage if they can’t make up their missed mortgage payments. This is typically the best time to strike a deal, as home owners are looking for ways to avoid foreclosure. Another prime time to buy: prior to an auction date.
2. Look in the right places. Follow the foreclosure trail. Title companies, banks, purchase money escrow offices, and credit unions can be good sources to find out about new foreclosures. Online services, such as RealtyTrac provide national information on foreclosures, broken down into such categories as bank-owned, auction, and pre-foreclosure. The Hudson & Marshall Web site has auction schedules and even lets you make bids online.
3. Know when to walk away. For properties that have been left vacant for any amount of time, it’s important to check for any plumbing or electrical issues, vandalism, foundation problems, and mold. Recommend that your clients spend money on a home inspection to ensure they’re not overlooking problems that would be expensive to fix. Even if the property’s price tag has been steeply discounted, it still might not be the best deal.
4. Do your research. Before buying a foreclosed property, your clients should have the home appraised to get an accurate estimate of value. Also, they should ensure the title is clear and check for any liens — such as builder liens and taxes — that need to be paid off. This is public information and usually can be found at a county’s recorder’s office. Find out how much is owed on the home and make a list of everything that needs to be repaired, with an estimate of costs (add 10 to 20 percent to pad it). Now, you’re ready to make an offer.
5. Buckle your seatbelt. Foreclosure deals often move fast and require constant monitoring as properties wind their way through the process. Home owners who were in shock or denial or banks that have taken over ownership of the property may initially reject your offer. But don’t give up. Follow up is key — especially as an auction or REO time nears, they may change their mind. "The early bird definitely gets the worm in the foreclosure market," the authors say. Remember, if it looks like a great deal, other buyers are undoubtedly looking too. Therefore, make your offer more appealing, such as by being able to close in 14 to 21 days. While escrow periods are usually 30 days, you can find some banks that can act faster.
Interested in buying an investment property or just looking for a good deal? Send us an emial to Lehel@TeamSzucs.com , with the area(s) you are interested in and a description of properties you are prefer (bedrooms, bathrooms, garage, yard, etc...). We will send you a list of properties that are currently in the foreclosure process, as well as bank owned properties. If you find one you like, call us and we will help you make a successfull purchse.