In the search for a nice deal, countless Macungie investors think of buying foreclosure properties. But the method of purchasing a foreclosure can be a bit tricky to navigate, in case you’ve never done it before. Even so, with some pointers on how to successfully buy a foreclosure property – and how to see warning signs informing you to walk away from a deal – you can add foreclosure properties to your next investment property search.
It’s significant to note the difference between a traditional listing and a foreclosure. Although traditional listings are typically homeowners or investors selling individual properties, foreclosures are properties that have been reclaimed by the lender or bank for nonpayment of the mortgage. Just in case a property has been foreclosed on, the lender will generally attempt to recoup as much of the outstanding mortgage as they can by selling the property, often at a price below market value.
Whenever you are about to start your search for foreclosed properties, your next step in the process may be to hire a real estate agent who specializes in foreclosures. These real estate professionals have an in-depth knowledge of the process and the local market and maybe a useful source of guidance and info. Search for agents with certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). These classifications specify that the agent has accomplished additional training in foreclosure property deals.
Besides the right real estate agent, you might, want to ensure that you have financing lined up and ready to go. Foreclosure deals can move very quickly, so you have to be ready to do so, too. The most successful foreclosure buyers provide preapproval letters and other documents to the bank or lender in an attempt to demonstrate their ability to close the deal quickly. The last thing a bank could ever want is to sit on a valuable property for more time than is necessary. Though, they still would like to obtain as much as possible for it. It is a unique balance and one of the basic reasons as to why buying foreclosures can be a far more nuanced process than traditional home sales.
Even when things are moving rapidly, don’t forget to do your due diligence. Run your numbers and locate comparable properties in the area before making any offers. In very competitive markets, you would want to offer a bit more than the initial asking price to appeal to the bank or lender. If so, then this higher price should be included in your calculations.
Throughout the procedure, pay close attention to potential red flags. By way of example, it is very critical to verify cautiously for hidden liens on the property. It is common sense to anticipate that if the previous owners stopped paying their mortgage, they probably have failed to pay some or all of their other debts, too. Unpaid property taxes and other debts can result in liens against the property that will need to be paid before the title can be transferred into your name. Another big red flag is serious repair issues or missing things.
Even while quite a few cosmetic issues are usual in a foreclosed property, several people might have seriously neglected or even intentionally damaged the property before they are forced out by the foreclosure. Angry owners and tenants have been known to strip the house of anything of value, including copper pipes, fixtures, doorknobs, and even cabinets. Contingent on how large-scale the necessary renovations are, you may see that what is a great deal, in the end, might turn out costing you so much more to renovate.
Purchasing foreclosed properties is a decision each investor will need to make on a case-by-case basis. But, fortunately, with the right people on your team and a readiness to undertake a bit of risk, you can easily identify a perfect bargain property that will pay out for many years to come.
Whether you decide to purchase a foreclosed home or a traditional listing in Macungie, make sure you have the right team managing your investment property. Speak with someone in the Real Property Management Lehigh Valley team; contact us online or call 484-544-3351 today!
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