Tips for Buying a Cheap Foreclosure
It seems that half of the real estate industry is trying to make profit from foreclosure and half of the homes in country are in foreclosure. Majority of the homeowner are forced to go into foreclosure because they don’t find a way to make mortgage payments. The crises offer an opportunity to the homebuyers to buy a home less than the actual cost of a house. The homeowners were able to pay the mortgage installments, but as the crises started they were forced to stop making the mortgage payments.
Buying a foreclosure seems very attractive, but there are many drawbacks of buying a foreclosed home. Good deal of foreclosure normally go very fast on the real estate market. It is impossible to get the property with excellent condition in a prime location with fifty percent discounted price. But 20 percent under the neighborhood market is very possible. If you’re a potential foreclosure buyer, the obvious place to start is price and condition. But there’s far more to it. Consider these seven top tips to get your best deal.
There is a huge difference between the prices a real world of bank owned homes and a buyer views the property. If you are a foreclosure homebuyer or an investor, then you may think that the foreclosure homes sell for pennies on dollar. However, this impression is false and it is not the way, how foreclosure works.
Most of the buyer jump to the real estate market for buying foreclosure after watching TV news that banks are filling foreclosure. They think that banks just want to get rid of the foreclosure and the will sell the property as low as 50% or even less.
Why the Price of a Foreclosure Can Appear Cheap
In a declining market you can buy a foreclosure generally for much less than its original loan balance. But, it does not mean that the will be selling the foreclosure less than the market value. Market value might be 50% less than the last time the home sold, but that foreclosure price will generally reflect the value of the homes around it.
Where to Find a Cheap Foreclosure to Buy
Most of the homebuyer call real estate agents to find the cheap foreclosure houses, but it is rare to find the cheap listing in MLS. If you are so lucky and very fast to write and offer, you might be able to buy a foreclosure for little bit under comparable sales. But bargain-basement steals are typically not listed in MLS. It’s because banks, like other sellers, want to draw as much as possible amount from the sale of foreclosure. Banks normally hire the real estate agents to do an appraisal to know the exact amount that they can draw. The agent takes the condition of the home into consideration and names a price. Then other agents in MLS compete to buy that home for their buyers.
Look for a cheap foreclosure on following places.
Trustee’s or Sheriff’s Auction
Buyers need to reduce the competition for that foreclosure to find a cheap one. Buyers can find notice of auction online and in newspaper or circulating in their area they live. There are a number of websites that post information about the foreclosure auctions. Most of the foreclosure buyers pay cash at the auction and the buy the home “as is” condition. But, smart buyers pay the title company to do the investigation prior to the bidding. If there are some liens like Texas, delinquent HOA dues or superior loans and don’t opt for purchase if they don’t find it suitable for them.
Most of the auction homes normally advertise in newspapers and online as well. They might spread message around the country for the date of auction. A private auction house often will let a buyer obtain financing to buy a cheap foreclosure. Buyers can also bring a buyer’s agent to represent them. Some of the auction companies let the homebuyers inspect home before bidding. Buyers should be prepared to set a limit and should hold their excitement while bidding on the auction date. Otherwise, a buyer can overpay for that cheap foreclosure.
Buy a cheap foreclosure directly from the bank
The best place to buy the cheap foreclosed home is to remove the middle man and directly buy from the bank. Banks are more willing to give a break on the price if a buyer / investor buys more than one home in a bulk purchase. Majority of the banks maintain a list of foreclosed homes that are available for sale. Buyers can also check the HUD website for a list of HUD-owned homes.
Look for mispriced listings
The underpriced properties get a huge activity and go very quickly, but there some chances that you may find some suitable home for you. An overpriced property will generally get little interest and may sit on the market for a year or more. Therefore, when someone actually makes an offer, the bank may act on it quickly.