Foreclosed property is property that is claimed by the bank / lender of a loan from the debtor who is unable to make loan repayments on time, and who agreed that the said property would be an asset to stand as security / collateral to pay back the loan.
Foreclosed property is usually put on auction for bidders to purchase the said property, and the sale is made when an offer that covers up the remaining debt amount is made. If the property is not sold at an auction, it is reclaimed by the bank and recorded in its books as a non-performing asset.
While foreclosures can be daunting to the debtors, it opens up horizons for buyers who are looking to make a good deal in buying real estate. As this property will be sold for a price that is usually determined by the bank, to recover the part of the amount that was defaulted by the debtor, the costs are more economic and almost any real estate buyer would be interested in it.
There are a few things that Jeff Adams believes one should keep in mind while buying foreclosed property. Here are a few tips that will go a long way in helping you make a wise decision when it comes to buying foreclosed homes.
1. Banks do not want Real Estate
Banks do not want bad loans to show in their books. They do not want to foreclose on real estate. They only want people to be able to pay back their loans on time. This gives you power while negotiating with lenders. It also helps to think of creative solutions to buy the property and take it off their hands, too.
2. Research and Be The First
It is always good to research and find out about the homes in your area that haven’t been making their payments. This way, you will know when a foreclosure is about to happen and you can approach the homeowner and try to strike a deal with him / her.
3. Budget Carefully
Foreclosed homes usually need remodeling or repairs if you want to put it back on the market. So, before buying a foreclosed property, ask yourself all the right questions which concern your budget.
4. Don’t Fall for Bidding Wars
Avoid bidding wars as far as possible. Most lenders will sell foreclosed property with a starting bid of a reasonable amount, but as the bidders raise the price, they get a little too emotionally involved. Don’t fall for those bidding wars. Do your homework about how much the property is worth, and pull yourself out of the bidding war when you see the price rising beyond that.
5. Make Clean Offers
While bidding on a foreclosed property, try to make a clean offer. Banks / lenders look for a hassle free, and speedy process to sell these foreclosed properties. So don’t look to ask the bank for repairs, and other unnecessary clauses to add to the contract. You may also put forth a stronger offer when you are able to pay a larger down payment for the purchase, because it tells the bank that you are committed to buying the said property.
Follow these tips, and you won’t go wrong in investing in foreclosed property.
