The first thing you should seek - or look forward to - is weeks and even months of diligent evaluation. The prospects in foreclosed homes often fall into the old adage, "If something seems too good to be true, it generally is." What is true is that some foreclosed properties will sell at 30% to 40% below market. But based on the editor of one real estate investor's publication, "Almost all foreclosed homes sell at 5% below market."
Location
If the foreclosure opportunity you're searching for is an investment opportunity, then you would be clever to review five years or more of real estate sales history in the location. Have the properties appreciated enough to make your investment risk worthwhile? The property does not should be in an exclusive neighborhood, but it ought to be in an economically stable area. This isn't an issue of who is moving in and who is moving out, but rather how much is being paid for the properties changing hands.
One lately introduced factor to think about if you are looking in the Southeast is the price of homeowner's insurance and coverage for windstorms. You may find some real bargains in Hurricane Lane right now there, but also find yourself purchasing a home you cannot afford to insure. You will also find areas where flood insurance is simply no more available.
Physical Condition
Consider the circumstances of a foreclosure. Most folks lose their grip on their homes after struggling to meet mortgage payments for an extended duration of time. That possibly means the home has received little or no maintenance, and the property you're inspecting may appear to be in bad shape. If it's in a quality location nevertheless, ignore the circumstance for the moment, take note of the obvious signs of deterioration, and incorporate rehab prices into your calculations.
Analyze the Competition
Consider that just as in any commercial real estate market, you are bidding against professionals. You will find persons in most areas who make a living from buying foreclosed properties, cleaning them up and putting all of them right back on the market. Professionals operating in that fashion might not be willing to bid up near market price for the neighborhood, however with any nicely located property you are not going to walk away with a "steal." Take a look at recent foreclosure sales in the location and see if you will find a pattern in the prosperous bids - how far below market are they?
Clean Title
With any foreclosed property you need to look directly at the condition of the building's title. Check to discover if there are actually any liens on it besides that of the lender who is selling it. If you can, determine if the former owner is embroiled in any lawsuits that will conceivably lead to a challenge of the sale and tying up the property. In theory, once a property reaches the foreclosure stage it is going to market unencumbered. That indicates nothing to an attorney who sees opportunity in trying to delay disbursement of the former owner's principal asset. Delay is the operative word here; if you're going to invest in a property you need to be able to put it to work for you with dispatch.
Location
If the foreclosure opportunity you're searching for is an investment opportunity, then you would be clever to review five years or more of real estate sales history in the location. Have the properties appreciated enough to make your investment risk worthwhile? The property does not should be in an exclusive neighborhood, but it ought to be in an economically stable area. This isn't an issue of who is moving in and who is moving out, but rather how much is being paid for the properties changing hands.
One lately introduced factor to think about if you are looking in the Southeast is the price of homeowner's insurance and coverage for windstorms. You may find some real bargains in Hurricane Lane right now there, but also find yourself purchasing a home you cannot afford to insure. You will also find areas where flood insurance is simply no more available.
Physical Condition
Consider the circumstances of a foreclosure. Most folks lose their grip on their homes after struggling to meet mortgage payments for an extended duration of time. That possibly means the home has received little or no maintenance, and the property you're inspecting may appear to be in bad shape. If it's in a quality location nevertheless, ignore the circumstance for the moment, take note of the obvious signs of deterioration, and incorporate rehab prices into your calculations.
Analyze the Competition
Consider that just as in any commercial real estate market, you are bidding against professionals. You will find persons in most areas who make a living from buying foreclosed properties, cleaning them up and putting all of them right back on the market. Professionals operating in that fashion might not be willing to bid up near market price for the neighborhood, however with any nicely located property you are not going to walk away with a "steal." Take a look at recent foreclosure sales in the location and see if you will find a pattern in the prosperous bids - how far below market are they?
Clean Title
With any foreclosed property you need to look directly at the condition of the building's title. Check to discover if there are actually any liens on it besides that of the lender who is selling it. If you can, determine if the former owner is embroiled in any lawsuits that will conceivably lead to a challenge of the sale and tying up the property. In theory, once a property reaches the foreclosure stage it is going to market unencumbered. That indicates nothing to an attorney who sees opportunity in trying to delay disbursement of the former owner's principal asset. Delay is the operative word here; if you're going to invest in a property you need to be able to put it to work for you with dispatch.
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