There was a time in the not-too-distant past when finding a livable foreclosed home to purchase was nearly impossible. Particularly with the real-estate boom of the late 90's and the first decade of the 2000's, if an individual was no longer able to pay their mortgage for some reason, selling it was hardly an issue. With so many buyers in the market qualifying for loans much larger than would have been approved in the past, sellers were often in a position to make a large profit off of real estate investments in a very short amount of time. On the rare occasion that an owner was forced to foreclose on a home, it was usually because the home was in rundown due to structural damage caused by age or extreme acts of God such as earthquakes and floods.
Unfortunately for many, the real estate boom eventually saw a spectacular implosion. However, this has provided an opportunity for the savvy real estate buyer. Nowadays, any real estate search will inevitably yield at least a few foreclosed homes to choose from in your area. In some areas of the country, in fact, it is very difficult to find a home for sale that has not been foreclosed on because the market in those areas has dropped so drastically from its peak that most homeowners owe more on their mortgage than the home's current market value making holding on to the property untenable.
If a buyer is in the fortunate position to purchase a home with cash, he or she should consider purchasing a foreclosed home at auction before it is listed for sale to the general public. Since selling a foreclosed home in the traditional manner (i.e. using a real estate agent and engaging in the offer/counter-offer process) costs the owner (in this case the bank) a considerable amount of money, the bank is generally willing to accept less for the home if it is purchased for cash at the preliminary auction than if it is sold using the traditional approach. You can find the foreclosure auctions in newspapers, the websites of banks and government agencies. The listing will usually indicate the address of the home and the minimum starting bid.
Just like with any real-estate transaction, it is important that a buyer first secure the services of a real-estate agent to work on their behalf. Most banks will not deal directly with individual buyers and require that they have professional representation to streamline the negotiating process. In addition, many real estate agents often have first access to new real estate foreclosures prior to them being listed which still works well for the buyer.
Once the services of a credible agent have been secured, it is time to focus on the search for foreclosed property. The buyer can state their preferred area as well as the kind of house design that would interest them. Of course foreclosed homes are sometimes not in the best of conditions, as the previous owners had no incentive to continue their regular maintenance after they realized they were going to lose the home.
This is because foreclosure generally means a certain level of financial distress for the person letting go of the house. The mortgagor will sometimes have had to sell appliances, window treatments, and accessories from around the home such as drawer pulls and light fixtures in order to meet smaller but pressing financial needs. Because of this a buyer must not assume that every foreclosed home is a bargain. One must carefully assess a home's condition and compare the costs of rehabilitating it to a decent habitable state against the amount of money that will be saved on the purchase price of that home.
Once one finds a foreclosed home whose condition and price they are comfortable with, they must then prepare for the lengthy negotiation process with the bank. Bear in a mind that in an ordinary real estate transaction, the owner/seller is usually an individual and is selling only one home, meaning his or her response to an offer will be fairly fast.
In a foreclosure, things are very different. Remember that the mortgagee (i.e. the bank) is often managing dozens, if not hundreds, of foreclosure sales at any given time. Thus, the response time on an offer is often quite slow and the whole negotiation process could take several months. But if one lands on a foreclosed property that represents a real bargain, then the wait is always worth it. The key to successful purchase of foreclosures is patience, research, good professional representation (real estate agent) and of course money.
Wyatt Boustead has invested in real estate over many years and has also experienced the pains of foreclosure himself. After taking into consideration the difficult times we are living in and realizing that things will change for the better, he believes this may just be the right time for the careful investor to toBuyForeclosedHomes.com buy foreclosed homes.
Visit his website at toBuyForeclosedHomes.com toBuyForeclosedHomes.com
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