Foreclosures are an excellent way to invest in real estate states Jeff Adams. As a bank is holding the property, they want to sell as quickly as possible to recover their financial investment. However, the process is not as simple as it sounds. Jeff Adams #1 Real Estate Trainer states that investing in a foreclosed property means negotiating with the bank, hiring a real estate agent, maybe a lawyer or an accountant, finding financial support, doing your due diligence, etc. to help you deal with the process. If you are new to investing in foreclosures, here is a short guide that will prove immensely helpful.
Step #1 – Find Pre-Foreclosure Properties
Most banks advertise their inventory on their website or at local branches. They may also advertise on local newspapers. You can also check with the county courthouse, foreclosure listing services, and online public records websites to find foreclosed properties that are on sale. Even after the foreclosure notices have been put up, owners do have 2-3 months to make payments and reclaim their properties. Ensure that the house is in foreclosure before you make an offer.
Step #2 – Investigate the neighborhood
It’s a good idea to check out the neighborhood and assess the property for its value. The actual foreclosure process may extend over a year. In this case, the house is usually poorly maintained and it may require intensive renovation. This will cost you money and you should factor it into the purchase price. If possible, hire a property inspector to give you the real facts about a property. Be particularly careful of homes that seem to be very, very cheap.
Step #3 – Talking to the bank
If you like the property, you can then make an offer to the bank. The bank will look it over and then accept it, deny it or counter it with another offer. Usually, there are several people bidding on the same property and you may be asked to submit your highest bid on the property. There may be intense interest in the property and the bank may choose to switch over to auction mode. In that case, establish a base price and stick to it. Do not let emotional feelings sway you into overpaying for a property.
Step #4 – Buying the foreclosure
If your offer for the home is accepted, it is time to sign the documents and get your property. You should ideally have your financing ready in the form of a pre-approved loan. In most states, the closing process is handled by a Title Company that does the title search, background research, and paperwork. You may also need an attorney to act as a witness. Once both parties have signed, the deed is recorded with the local county and the property is transferred to the new owner.
As you can see, there is a lot involved in buying a foreclosed property or any property for that matter. If you can, hire a professional real estate agent to help you with the selection, investment, and financing process. However, even with the services of a professional, make sure you learn about the process as much as possible.
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