How to Buy Foreclosure Properties

13th May, 2010 - Posted by admin - No Comments

This information shows you how to buy foreclosure properties. In good times and bad times depending on your aim, purchasing foreclosure properties can be a good thing. If the times are tough, obviously, there are going to be more foreclosures, therefore, more foreclosure properties available. But the question is always how.

To buy foreclosure properties is not much different than purchasing in the typical retail market. There are some special considerations to make dealing with foreclosures, but nothing that a little bit of preparation can cure. Real estate is an industry for the prepared. You have to be willing to do your due diligence and research before you make important commitments.

Your research and preparation will depend on your intent with the property. Each one contains their set of specific parameters. This ranges from the person that wants to buy and move into the property to the real estate investor that wants to buy, flip or rent the property for a gain.

With that in mind, let’s layout the basic steps involved in the purchase of foreclosure properties.

#1 – Decide to buy a foreclosure. Everything in life begins with a commitment. If you are going to go this route, then you must make it and keep moving forward.

#2 – Foreclosure Financing. Before you can buy anything you need financing. And not all financing sources are lending to this market, so you before you continue you should sure up your money. If you have your own financing, then move to step #3.

#3 – Property Type. Decide what type of foreclosure property fits your needs and goals. If you are looking to live in the property, then single family homes might be what you want. If you are investing, do you want commercial or residential properties, multi-family or single family? These decisions effect everything elses and might be limited by your financing.

#4 – Selection a Location. By narrowing your search to a specific geographic location, you do yourself a big favor. There are literally thousands of properties available and by selecting the property type you are searching for and now the location you are bring that number down to something even more manageable. This allows you to get out into the field to start viewing properties.

#5 – Start viewing Properties. You have your farm area, so now it is time to get out and get familiar with it. You have to see what is on the market at retail level and in the foreclosure market. This gives you perspective on the cost of the property in foreclosure to the retail market and the amount of repairs that will need to be made to the property purchased. Not all properties need massive repairs in foreclosures, but you should be prepared to do at least a minimum amount of cosmetic repairs. Sometimes the job calls for more.

The point is it is time for you to get out into your market and view properties.

#6 – View short list with contractor. During your escapade through your farming area, you should have developed a short list of properties that you really want to go over again. Now is the time to bring out your contractor or home inspector to these properties. Be prepared to compensate them something for their time. But most contractors will do this for nothing within reason for the prospect of getting the work once you have secured the property.

Your goal is to figure out how much damage is been done to the property and how much it will cost to repair it all to make the property up to your living or rental standards.

#7 – Make an offer. At some point, you settle one a property and need to make an offer. This will be a contract offer that you will purchase the property for ensuring it is inline with your financing. You can use a realtor to facilitate your real estate endeavor or even an attorney. If you are brave enough, it is your money, so you can do it all yourself. We recommend building a team to assist you every step of the way.

#8 – Acceptance & Earnest Money. Like most real estate transactions, upon an executed contract, your earnest money is accepted and the deal is on. The earnest money is your down payment and nonrefundable commitment to the purchase of this real estate.

#9 – Home Inspection & Appraiser. To satisfy yourself, your financing element, and the process you need to call in a few inspectors. The home inspector and appraiser will render their reports on the condition and value of the home. Most financing outlets require these to advance the process. Both of these elements will more than likely need to be paid upfront, so have money set aside for these expenses.

#10 – Meeting Contract Specifications. Every contract has things that must be done to before they are satisfied. Your team of professionals will help you navigate the contract and be sure every end of it is satisfied.

#11 – Closing. The big day is all brought to an end when you meet the seller’s representative or attorney at the closing to finalize the documents, execute the financing for the seller, and provide the buyer with the paperwork for the property, keys and the bundle of rights associated with a real estate transaction.

You know own a piece of previously foreclosed property

The real work is starting at this point. You went through all the hoops, pitfalls and hopes of this process to acquire your real estate and the work is now to get the rehab done or get settled in the property. But it is often times the most rewarding.

As always you are encouraged to learn more about how to buy foreclosure property, personal finance investing and more on our website and to Invest With Passion!

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