In the quest for a fine deal and bargain, a lot of Quincy investors think about buying foreclosure properties. But truth be told, the process of purchasing a foreclosure can be a bit tricky to navigate just in case you’ve never done it before. Despite that, with some advice on how to successfully buy a foreclosure property – and how to detect warning signs notifying you to walk away from a deal – you can add foreclosure properties to your next investment property search.
It’s vital to note the difference between a traditional listing and a foreclosure. Even though 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. In case a property has been foreclosed on, the lender will, as a rule, make an effort to recoup as much of the outstanding mortgage as they can by marketing the property, often at a price below market value.
Supposing you are now prepared to embark on your search for foreclosed properties, your next move could 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 could be a beneficial source of guidance and valuable information. Seek agents with certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). These qualifications imply that the agent has executed additional training in foreclosure property deals.
Apart from the right real estate agent, you can additionally make certain that you have financing lined up and ready to go. Foreclosure deals can move very quickly, so you have to be equipped 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 likes is to sit on a valuable property longer than necessary. Although they still hope to take and get as much as possible for it. It is a unique balance and part of the reasons why buying foreclosures could be a far more nuanced process than traditional home sales.
Even as things are making rapid progress, 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 may have to offer a bit more than the initial asking price to appeal to the bank or lender. In this case, then this higher price should be included in your calculations.
Within this whole process, pay close attention to potential red flags. To cite an instance, it is vital to examine attentively for hidden liens on the property. It is common sense to think that if the previous owners stopped paying their mortgage, they may have failed to pay some or all of their other debts, additionally. 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.
Despite the various cosmetic issues are common in a foreclosed property, a few people may indeed 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. Depending on how great the much-needed renovations are, you may discover too late that what looks as if it’s an enticing deal will actually prove to be too costly to renovate in the end.
Procuring foreclosed properties is a decision each investor will need to make on a case-by-case basis. But the good news is with the right folks on your team and a preparedness to take on some risk, you just might discover a great bargain property that will pay out for many years to come.
Whether you decide to purchase a foreclosed home or a traditional listing in Quincy, make sure you have the right team managing your investment property. Speak with someone in the Real Property Management Boston team; contact us online or call 617-522-0099 today!
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