The truly motivated seller is the one who is about to lose a home to the lending institution, the uninvested foreclosure trustee or to the bank that's simply trying to make their money back.
When buying foreclosure properties, you can buy from the owner before foreclosure, from a trustee at foreclosure or from the bank that owns the property after the foreclosure is finished.
While foreclosed properties are typically offered at auction, you can often get a better price if you can buy the property before it enters into the foreclosure process.
Because foreclosure properties often sell for a much lower price than, say, the well-kept home next door, they can save a prospective homeowner a lot of money.
However, they can also cost you a lot of money as well.
Former owners who have lost their homes to foreclosure often leave behind destruction and a less-than-pristine property.
In this article, we'll show you how to protect yourself against foreclosure money pits.
Keep reading to learn how.
1.
Bring an inspector.
While some home auctions don't offer an open inspection period, look for ones that have a designated viewing period.
Spend the money and hire an inspector to come with you to the auction property or properties.
By hiring a professional inspector, you'll get a clear idea of exactly what the foreclosed property is worth and how much it will potentially cost you.
2.
Check for code violations.
Contact your city records department to see if there are any outstanding code violations against the property.
For example, keep an eye out for an addition or extra story that didn't meet city code or was built with a permit and may have to be torn down, costing you thousands of dollars.
3.
Hire a foreclosure agent.
There are real estate agents who specialize in foreclosure properties.
They can navigate the system, locate hidden gems and help explain the legal jargon associated with a foreclosure purchase.
Hiring a foreclosure expert is going to save you a lot of money and stress.
4.
Look for foreclosure loans.
When buying a foreclosed property, inquire with your lender about specific loan programs that are targeted directly toward foreclosure investments.
5.
Look for a mortgage/renovation loan combination.
If you're purchasing a foreclosure property that's going to need to a lot of repairs or renovations, look into a mortgage that includes extra funds for repairs.
Getting a mortgage with extra renovation funds is often cheaper than just a basic home improvement loan, and the interest may be tax-deductible, saving you a lot of money in the long run.
When buying foreclosure properties, you can buy from the owner before foreclosure, from a trustee at foreclosure or from the bank that owns the property after the foreclosure is finished.
While foreclosed properties are typically offered at auction, you can often get a better price if you can buy the property before it enters into the foreclosure process.
Because foreclosure properties often sell for a much lower price than, say, the well-kept home next door, they can save a prospective homeowner a lot of money.
However, they can also cost you a lot of money as well.
Former owners who have lost their homes to foreclosure often leave behind destruction and a less-than-pristine property.
In this article, we'll show you how to protect yourself against foreclosure money pits.
Keep reading to learn how.
1.
Bring an inspector.
While some home auctions don't offer an open inspection period, look for ones that have a designated viewing period.
Spend the money and hire an inspector to come with you to the auction property or properties.
By hiring a professional inspector, you'll get a clear idea of exactly what the foreclosed property is worth and how much it will potentially cost you.
2.
Check for code violations.
Contact your city records department to see if there are any outstanding code violations against the property.
For example, keep an eye out for an addition or extra story that didn't meet city code or was built with a permit and may have to be torn down, costing you thousands of dollars.
3.
Hire a foreclosure agent.
There are real estate agents who specialize in foreclosure properties.
They can navigate the system, locate hidden gems and help explain the legal jargon associated with a foreclosure purchase.
Hiring a foreclosure expert is going to save you a lot of money and stress.
4.
Look for foreclosure loans.
When buying a foreclosed property, inquire with your lender about specific loan programs that are targeted directly toward foreclosure investments.
5.
Look for a mortgage/renovation loan combination.
If you're purchasing a foreclosure property that's going to need to a lot of repairs or renovations, look into a mortgage that includes extra funds for repairs.
Getting a mortgage with extra renovation funds is often cheaper than just a basic home improvement loan, and the interest may be tax-deductible, saving you a lot of money in the long run.
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