While the process of foreclosure is fairly straightforward and easy to understand, real estate legend Jeff Adams tells you how to make best use of foreclosures when you want to buy a home. When a home owner defaults on his mortgage payment for over six months, he is issued a Notice of Default (NOD) by the bank or lending authority.
Once the default period begins, the home owner has up to five days until the day of auction to pay the debt. A Notice of Sale then invites investors to buy the property, over a period of three weeks and the home goes to the highest bidder. All sales are made in cash, 24 hours after the deal is closed. Here are some tips to keep in mind when buying a foreclosed home.
1. Know Which Properties to Make a Low Ball Offer On
If you are shopping for a home on a budget, then it is best to wait a while after the house is put on market. Jeff Adams estimates that three weeks after the auctioning of the house begins, the prices are slashed, making it the perfect time to buy. The downside is, this is not a hard and fast rule, so there is no guarantee prices will fall. So Jeff recommends saving this tactic for houses you truly believe are overpriced.
2. Research the Property Worth
Sometimes agents list a price that is lower than the bank rate to get you to be emotionally vested in the property before starting a bidding war. According to Jeff Adams, this is probably the oldest marketing gimmick in the book. To avoid this, make sure you ask two or three different realtors what they estimate the property is worth, and arrive at your own realistic number. This will prevent you from potentially overpaying.
3. Be Specific
There are a slew of properties to choose in the market and it can leave you overwhelmed. Before the hunt for the house, list down a few neighborhoods you would like to target, as well as the specific type of house you would like. This will help your agent to find properties that will best suit your needs.
4. Act Fast
Once you come across a house that seems to be a perfect fit, don’t over think the decision too much. If you wait too long before making an offer, you may find yourself in a bidding war with other aspirant home buyers, or you may have just lost the sale. So before you decide to buy a foreclosed house, ensure your finances are in check to make a quick and speedy transaction.
5. Keep it Simple
The golden rule of foreclosure investment is ‘Cash is King’. Deals move through a lot faster if you have cash up front and a big down payment never hurts. A friendly tip to keep in mind when you have competing offers is that banks like quick and simple deals. Once the deal comes through, don’t add too many repairs and sub clauses into your contract, unless absolutely necessary.
Before finalizing on the deal, consult with a lawyer to make sure that the house you are about to purchase is in compliance with all legal requirements. Jeff Adams and his team are expert advisors on how to close the deal on your dream home, and he is more than happy to provide his services.
