The foreclosure inventory makes it much easier to find great deals on houses priced far below what they are worth. The process on how to buy a foreclosure needs to be an intention process to minimize your risk and protect your upside equity on the house you are purchasing. Buying a foreclosure needs to be a team sport and some of the critical members of your team include the following.
You will need a strong Realtor to help you through the process. Notice I didn’t say just any Realtor. I truly believe that not all Realtors are made equal. Although I am sure you know a neighbor, friend or family member that is already a Realtor, they may not be the best one for you work with. Selecting the right Realtor is very important.
The right Realtor is an experienced Realtor who has completed a number of buying and selling transactions in today’s foreclosure marketplace. The attitude of your Realtor is also very important. Find one who has a positive mindset and who will work to help you achieve your goals. Some Realtors specialize in listing foreclosures, others specialize in short sale listings and others spend their time as buyer’s agents. You will want to do some investigating and asking for referrals when choosing the Realtor for your team. Find one that will put your goals at the forefront of your house-hunting journey.
You Realtor will help you find the best houses that meet your needs for location, size, features and floor plan. They will also be able to assist you with finding houses with a lot of upside equity that are heavily discounted.
All foreclosures have potential repair issues. Sometimes these repairs are simply cosmetic in nature, such as heavily stained carpeting, chipped paint and maybe grease all over the kitchen ceiling. Often times there are holes in the walls, missing appliances and more serious issues such as bad roofs, faulty wiring, plumbing issues or a structural concern. I recently looked at a foreclosure that was also used for growing marijuana. It had the remnants of the grow lights, holes in the floors for drainage and all the other features you might expect in this type of operation. My point is buyer beware on all purchases and the best way to be sure of what you are buying is to have the home professionally inspected by a reputable and licensed home inspector. This is a very important step in buying a foreclosure that helps you minimize your risk and avoid surprises.
Most foreclosures being purchased today are being sold as-is, meaning the banks will do no repairs for you. This does not mean you should waive your inspection rights. Being diligent on the condition of your home is critical.
Another critical person on your team will be a good contractor. A good contractor will have a team supporting him that can include all the trades such as plumbing, electrical, roofing, heat and air, carpentry, painter, flooring and so on. The reason you need a good contractor is that most of the foreclosures and distressed properties available will need some level of work. The contractor can help you understand what you can and can’t do regarding potential renovations in the home. He will also help you understand the expenses behind your renovations. A good contractor is one who is reliable, insured and properly licensed to assist you. He should be capable of handling the recommendations of your home inspector as well.
The foreclosure process is prone to title issues. You will want to work with a strong attorney who can help you ensure that your title is both clean and insurable. This way you are fully protected if the foreclosure process was not properly completed prior to your purchase.
Today’s market is jammed full of distressed properties that provide unprecedented buying opportunities to help set up your income streams for many years to come. Buying foreclosures is an easy way to get started as they provide a lot of inventory in good neighborhoods, nice cul-de-sacs and in great school systems. Make it your goal when buying a foreclosure to stick to your original set of goals and find the right house for your family. Do not just jump at the very first great deal you find if it does not meet your needs.