Every year thousands of homes are foreclosed due to defaulting payments. While you may be looking to close on a sweet house under foreclosure, these deals come with their own host of problems. It is possible that you might make some mistakes that might burn a hole in your pocket. Real estate mogul Jeff Adams asks you to be wary and make sure that you avoid these 5 mistakes during a foreclosure investment.
- Doing it Alone
Foreclosed houses have a lot of red tape involved and you will need your band of advisors with you. Make sure to consult with at least two different realtors to estimate the value of the property. This is a good way to ensure that you don’t overpay for your home. Also, have your lawyer look at all the documentation as the laws of foreclosure differ from state to state. You could be inadvertently crossing some red tape and get yourself into trouble.
- Ignoring Property Problems
Keep in mind that the house owners did not want to leave and there have been instances where previous owners have intentionally caused damage to property for whoever occupies the house next. Empty properties may suffer from neglect in the hands of the bank, leaving way for pests or vandals in the area. Ignoring property problems at the inspection stage might mean a huge (and unpleasant) bill in fixing up the property. Be fully aware that the house you may get during a foreclosure will be less than perfect and be prepared to spend a considerable amount of time and money in fixing it up!
- Ignoring Legal and Insurance Information
A usual sale will take place with a disclosure statement that indicates clearly all the problems of the house as well as insurance information. However, bank sales are done without the disclosure statement, so an even more thorough home inspection is needed. However, a home inspection may not always be possible as the tenants will still be staying in the house until the last possible minute. You might need to this aspect seriously while investing in foreclosed property. Also, ensure that the property is nowhere near a disaster zone or you will be spending extra on insurance and reselling the house will be difficult.
- Not Being Patient Enough
The sale of a foreclosed home takes longer than a usual sale. Often people lose out on some prime real estate because they are not willing to wait. Please bear in mind that the process requires the approval of the terms as well as the sale price from all parties involved. There have been instances where despite the collective efforts of his team, Jeff Adam’s clients have waited for over six months to get their home.
- Getting Overconfident
While foreclosed deals can sometimes be a steal, don’t make the mistake of thinking the bank will accept a low ball offer. The property might just slip out of your hands. Have a realistic selling price and negotiate. Once the offer is finalized on, make sure to get it in writing.
While all this information can be daunting, Jeff Adams and his team are at hand to handle these tricky situations for you. Having handled over hundreds of foreclosure cases, he is the go to man for your real estate investment needs.
