Only a few years ago, there almost half a million foreclosure filings on U.S. properties. Investing in the foreclosure market seems like a smart thing to do. Here are several mistakes you can avoid during your foreclosure-buying mission.
1.Limiting Yourself
Foreclosure listings of any kind have competitively priced items – whether they’re foreclosed properties or not. When you’re doing a property search, do not wear blinders. Many foreclosures often have liens against the property, must-do repairs and so on. Limiting yourself to foreclosures that don’t “come with any baggage” is a waste of time.
2.Knowing Everything
A lot of us delude ourselves into thinking we know every piece of information in the world. We don’t. One mistake most homebuyers make is to buy a foreclosed home without considering the advice of a real estate professional. These are industry experts who certainly know more about real estate than you.
3.Going Solo
Real estate agents have backgrounds in buying and selling these properties – take advantage of them (if you will). Also, be sure to know what the laws and regulations—which vary by state—are concerning your state by consulting with a real estate attorney. Having these 2 professionals on your side makes things easier.
4.Broadness
There are a lot of properties coming into market faster than you can say Jack Robinson. That’s why it’s a smart idea to search for a specific neighborhood and seek the guidance of a real estate agent in that area. Specify which type of property you want, as well as whether or not they are bank listings or even in the market yet. The more specific you are about the foreclosed property you desire (such as the cost and size), the more likely you are to find that property.
5.Ignorance
A huge mistake is not knowing how much you can spend – or what the market is for foreclosed properties in the neighborhood. Not knowing what the buying and selling process, or not knowing how to secure early financing, are also huge mistakes that newcomers make. Ignorance can usually be corrected by spending some time learning about making offers. Check comparable sales of markets.
6.Avoiding Inspection
Buying a foreclosed home without knowing what it looks like is the same as buying a car, sight unseen. You know virtually nothing about the home, other than the specifications your agent found you – which look good on paper. Although foreclosed homes are sold “as is”, you can still visit the property and peek through the windows – or gather a general idea of the state the home and land is in. (Even before bidding on it.)
7.Thinking Short Term
It’s a fact that foreclosed homes decline in value as time goes on – as do most homes. That’s why it is crucial to think long-term – such as ten years or more. Buying foreclosures may not be a good investment for flippers if you cannot afford a fully amortized, fixed-rate mortgage, a foreclosed home may not be for you.
Conclusion
As you buy a foreclosure, remember that banks will not accept a low-ball offer (generally). This is unless the listing says otherwise. Typically, banks outsource foreclosed properties to real estate agents. These real estate agents are the lifeblood behind getting good prices for properties. As you wander through this world of foreclosure and wonder, seek the counsel of a real estate agent to avoid many more mistakes.
