There are good things to be had in buying foreclosure properties, as many Hyrum investors are looking into them. Although purchasing a foreclosure can be a bit tricky to navigate, it’s not impossible. All you need is a bit of experience to guide you. Follow along to get to know how you can successfully buy a foreclosure property – and how to spot warning signs telling you to walk away from a deal – so, you can add foreclosure properties to your next investment property search.
It’s important to note the difference between a traditional listing and a foreclosure. While 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. It’s not uncommon for lenders to try and recoup as much of the outstanding mortgage of the foreclosed property. They do this by putting it up for sale, often at a price below market value.
Once you decide to commence the search for foreclosed properties, don’t be afraid to seek help by hiring 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 they can give you insight that will be helpful to you in making your future decisions. Look for agents with certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). These designations mean that the agent has completed additional training in foreclosure property deals.
Let’s say that you’ve found the right real estate agent for you. What’s next? Get your financing lined up and ready to go! Foreclosure deals can move very quickly, so best be prepared to make deals on the go. 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 would want is for it to hold on to a valuable property for lengthened periods of time. They will want, however, to sell it for as much as possible. It is a unique balance and one of the reasons why buying foreclosures can be a far more nuanced process than traditional home sales.
Though the transactions might be fast-paced, 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 might need to offer a bit more than the initial asking price to appeal to the bank or lender. Therefore, this higher price should be included in your calculations.
Throughout the entire course of the transaction, pay close attention to potential red flags. For instance, hidden liens on the property. This is something that you need to be aware of from the onset. Common sense dictates that if the previous owners stopped paying their mortgage, it’s possible that they failed to pay some or all of their other debts. 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.
Cosmetic issues are not unusual in a foreclosed property, but others may have seriously neglected or even intentionally damaged the property before they are forced out by a foreclosure. Angry owners and tenants have been known to strip the house of anything of value, including copper pipes, fixtures, doorknobs, and even cabinets. Check through the property and make sure that you don’t end up spending more on repairs than you do on the actual property.
Buying foreclosed properties is a decision each investor will need to make on a case-by-case basis. Don’t forget: to find yourself a good property investment management team is to find a bargain property that will pay out for many years to come.
Whether you decide to purchase a foreclosed home or a traditional listing in Hyrum, make sure you have the right team managing your investment property. Don’t hesitate to contact us online or give us a ring at 435-753-5200 to know more about what Real Property Management Cache Valley can do for you.
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