How to Buy a Foreclosed Home-A Killer Guide
Jun 10th, 2008 by Kaushik Adhikary
Image via WikipediaSome savvy home investors are always look out for jackpot buying foreclosed homes. Purchasing an under-priced foreclosed home is like ‘One man trash is another man’s treasure’. Although home foreclosure can be considered a tragedy it can also be a blessing for others. It’s unfortunate that a good chunk of people are loosing their beloved homes fast due to the recent long-driven home mortgage crisis.
With more and more houses being sold at heavy discounted prices, some opportune buyers are out there in the market to cash in some profits out of it.This is not at all an unjustified behavior.This is the way life goes. Essentials and gas prices are not the only ones that continue to rise. Residential properties are also expensive now. Their prices also vary from one place to another.
Repossessed homes can be great option for those who simply cannot afford a new home. These houses are sold for much reduced price now, compared to their normal market price. Taking the advantage of low-priced houses offered by the mortgage lenders, these people can make their own investments in much profitable ways.
But before getting into a deal, you need to do your homework and keep a few factors in your mind:
Comparison Price: If you search, you can find a list of foreclosed homes and information for auctions on the internet. The list is also published in local newspapers. Make sure you get competitive price that’s close to market value. Investigate into the prices of similar properties at the adjoining areas or look out for pending sales for the offer prices.
Determine Your Budget: How much are you willing to pay for the repossessed house along with the repairs? If you’re planning to resale the house ask your agent to calculate the property’s value. If you’re planning to lease it after buying the property, calculate the monthly rent and do some market research.
Physical Condition of the Property: You may have to do a little bit of research first to be able to see how much you will have to spend in buying and repairing the property. Sadly most of the repossessed houses are those that require a lot of repairs. Previous homeowners might not have the means to maintain the house in proper condition. Some of these houses have also been abandoned by their previous homeowners and mortgage lenders have no choice but to get rid of them immediately. But don’t ask for repair at the offer stage and try to renegotiate after acceptance of the offer.
Pre-approval Letter: If you don’t have any cash in hand , consider getting a loan. Make sure you’re qualified for a loan. If you are qualified, gather the information you need. Try to get pre-approval letter from your chosen lender in advance.
Analyze Agent’s Listings: Find out agent’s 3-6 months listings and determine the sales-price ratio with the help of buyer’s agent for your reasonable offer price.
Look for Best Offer Price: Before buying a repossessed home you need to make sure that you’re going to get a good deal. You should adjust your offer price based on other existing offers.
Property History: Try to get bank’s purchase price on the deed from the buyer’s agent. Then look for a title company to research the history of the house.
Once all the research and calculations have been done, place a good bid on the property. After you have purchased the house, have it inspected and appraised. When you’re satisfied with your repossessed house you can now start the repairs or live in it.
