Foreclosed properties can help you score some sweet deals with prices that are lower than market price. These are properties of home owners, who are defaulting on their payments. Such properties are seized by the lender and will be resold to the highest bidder to recover the remainder of the money due.
Jeff Adams the real estate guru shares the pros and cons of investing in foreclosed properties to help you get a better perspective on the process.
Pros of Foreclosure Investment
The Sale is Quick
If you are looking at buying a property fast then this is the best stage to do it in. With the urgency of quick cash conversion and to avoid the stigma attached to a formal foreclosure the seller is eager to finish the sale in a speedy manner. Ensure that at this stage you request for strict home inspections prior to finalizing your decision. Undertake thorough research to ensure that there are no liabilities attached to the property that will affect you later.
Better Bargaining Capacity for Buyers
Though before the big financial crisis, you were able to get foreclosed houses for a steeper discounts, you can still get some pretty good deals on a lot of property. A good neighborhood is a worthy investment even if does not appear to be highly discounted. The best way to determine whether you are paying more than the house is worth is to ask around and determine the cost of other houses in the same neighborhood and factor in the wear and tear. If you are unsure how to do that, you can always enlist the services of a professional appraiser.
You Get a House to Suit your Budget
The common myth is that foreclosures happen only to low value properties. However, this is far from the truth. Foreclosures happen to houses across varied price ranges. So whether it is a high value home or a budget second home, this is the right market to invest in. Make sure you know exactly what you are looking for and communicate that effectively to your realtor.
Given the slew of reasons to invest in a foreclosed home, you have to keep in mind that the house is pre-owned and there is likely to be some wear and tear. There are some cons keep in mind whilst investing in a foreclosed house.
Cons of Foreclosure Investing
Time Frame for Finance
Given how quickly the sale takes place, financing for it may be bit of an issue. To offset this foreseeable problem, Jeff Adams recommends you get your finances in order before you think about buying a foreclosed property. This will ensure that you don’t lose out on the opportunity of buying your dream home.
Condition of the House
Some of the houses may need lot of repairs to be done and damages to be fixed due to long term neglect. Though this is good news for you, meaning you will have better bargaining capacity, it also means when you buy the house there will be a lot more work than anticipated. Conduct a house inspection through a licensed contractor before you complete the sale.
While Jeff Adams admits that foreclosures can be a bit tricky, he and his team have it down to a science. Read his books and sign up for a course with him for best results. They will help you get equipped with the finer details of real estate and hold you in good stead while investing in properties.
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