Investing in foreclosures has been the trend in real estate over the last decade or so with a surge of financial problems causing home owners to default on their payment. Buying a foreclosed house means you get a good deal on your dream home for a price lower than its market value. Real estate guru Jeff Adams puts together a step by step process on how to invest in foreclosures.
1. Find the Right Property
There is a lot of prime real estate available for foreclosure and the trick is to find the perfect house. A good start is to enroll in a local real estate club, to network with realtors and other aspiring home owners. This will give you a more realistic picture of what the housing scenario is like and what the market prices for houses in the area are. Before buying a house, ensure that the neighborhood is safe. If other houses in the area are being foreclosed, it is a not a good trend and usually means there is a bigger problem at hand.
2. Home Inspection
While buying a house at a price lower than its market value, it does not make sense to spend the equivalent of that in fixing up the house after purchase. Most foreclosed houses are a little worse for wear due to prolonged stay by the former house owners. You should be mentally prepared for a few repairs and some big projects can be covered by the lenders by working these into the agreement. So before finalizing the deal, get your contractor to inspect the property and give you an estimate.
3. Get Your Team In
Finalizing a foreclosed home can happen faster than you anticipate, so ensure that you have your team of realtors, lawyers, and insurance agents at the ready. Quickly run your deal by them. This will help you make informed decisions and ensure that you get the best possible deal. Jeff Adams suggests that while the process seems straight forward, there is a lot of red tape involved and you will need these external advisors.
4. Get Your Finances in Order
While buying foreclosures, more often than not, the down payment has to be made in cash fully. So make sure you have your finances sorted out. If you are buying it as a second home, then your line of credit will allow a home loan. However, lending institutions are a little wary of people buying foreclosures for investment.
5. Exercise Caution
If your deal seems too good to be true, there is usually a reason for that. While it is usual to have a 20 percent mark down from the market price, anything lesser than that could mean there are strings attached. A good way to assess if you are getting a good deal is to see the selling price of similar houses in the same neighborhood. This will help you arrive at a figure at which to buy and don’t be afraid to negotiate if you believe you are overpaying. Exercise caution if the price appears to be too low.
To prepare yourself for a foreclosure deal, sign up for a session with real estate guru Jeff Adams. Having closed dozens of foreclosure deals, he is an authority in the area. Jeff and his team will simplify the nuances of foreclosure investment for you.
