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How to Buy Foreclosure Homes

HOW TO BUY FORECLOSURE PROPERTIESBuying foreclosed properties has become so popular that there are even television shows based on buying them, fixing them up, and putting them back on the market to make a quick profit. Whether you are interested in purchasing a foreclosed home to sell or to live in, foreclosure sales are a great way to pick up a property for less than market value.

Buy Houses at a Foreclosure Auction

Although some savvy real estate investors elect to purchase homes in the pre-foreclosure stage via the short sale, most choose to avoid this lengthy process by sticking to properties upon which the lender has already completed the foreclosure process. Once a lender forecloses on a property, the maintenance of that property becomes the responsibility of the lender. As you can assume, the lender wants to make money off the property, not invest in its upkeep. Because of this, if a lender puts a home on the market via a conventional realtor, they will not want to keep it on the market for long, and will eventually opt for a foreclosure auction to unload the property to the highest bidder.

Don’t Pay for Foreclosure Listings—They’re Free!

After the mortgage lender takes possession of the property, you can purchase it from a listing agent or via auction. There is no need to spend money on foreclosure listings offered on the internet because if you are truly interested in purchasing a foreclosed home, there are many resources to be had for free. These listings are public information and can be obtained simply by contacting a real estate agent, county sheriff’s sale office, by visiting government websites, or the websites of the auctioning agents.

Foreclosure Auctions Offer Great Deals on Properties

Foreclosed homes used to be auctioned off for generally less than fifty percent of their fair market value. However, the popularity of this means of home buying has resulted in greater attendance at foreclosure auctions and, more bidders means more competition, which leads to higher sales prices. Still, foreclosures are going for easily a minimum of ten to twenty percent off the market value of similar properties making them a substantial investment.

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  1. ciscogrove said:
    on August 1st at 01:59 pm

    The easiest way I found to get all the foreclosure listings in my county was through a title company. Where I live they are called Escrow and Title companies because they perform both functions. They give this information to anyone who asks and they give it for FREE. Don’t pay for it unless you can’t get a date otherwise .

    Having specialized in this market let me toss this piece of advice onto the table. Know the LAW in your state regarding foreclosures. You could just find yourself in a bind otherwise.

    Also, if you don’t know how to investigate the property before the sale, stay out of this arena. You will get burned. Foreclosed houses don’t necessarily go for 10 to 20 percent below market value. What drives the price of the house is the number of bidders.

    I’ve been at auctions where the dummies overbid the house by astronomical numbers. When asked (I always asked why someone paid what they did if it exceeded my market value calculations) most said their tenant would be paying the mortgage payment.

    I bet you can tell me the rest of that story, right?

    Anyway, just my 2 cents.

  2. gkr said:
    on August 5th at 03:12 pm

    Buying foreclosure homes is like gambling if done without any proper home work on the part of the buyer. It is a must for the buyer to know about the home he is going to by and at what rate he can best buy it. Otherwise the buyer only ends up in distress and gets trapped in the new costs of the home.

    Foreclosure homes can be cheaper if done during the process of foreclosure rather than buying at an auction by the lender. This takes considerable time but it saves money and gives quality to the house as homeowner may damage and strip it off during foreclosure.

    Unpaid taxes on the property are not eliminated when buying the home at foreclosure auction.

    It is better to attend foreclosure auctions to learn how they occur and who buys them at what price. You can also find out the quality of the home involved. This will help you assess the price of the home before attending the foreclosure auction and while attending it you can change the price and limit yourself to that price. As always in the auction markets, patience pays here.

  3. sell property uk said:
    on August 31st at 05:39 pm

    i have bought couple of house of this kind in last year. It can be a good investment but you have to be very careful at what you buy otherwise you might end up hurting your self

  4. Foreclosure Pro said:
    on June 12th at 09:35 pm

    Pros And Cons Of Buying Foreclosed Homes

    [Additional keywords: foreclosures, houses]

    If you are considering investing in foreclosures, you should first consider the pros and cons of buying foreclosed homes. Foreclosures happen because owners cannot afford to pay for the house he owes from a bank or real estate company. The bank or whoever has the right to resell the property will do so in a discounted price.

    During this time, many investors are looking for opportunities to profit from foreclosed homes. Since these properties are sold with less value than the average market standard, many are delving into this kind of investment and turn it into a profitable business.

    Many people have succeeded in investing foreclosed homes. But with success comes certain failures along the way. And even the most successful foreclosure investors have stumbled in this very tricky business venture.

    Pros And Cons To Look Out For

    These pros and cons of buying foreclosure homes can help you if you are considering investing on foreclosures.

    Pros

    • The main pro or advantage from investing in foreclosures is that you can make profit from it. As mentioned earlier, foreclosed houses are sold for less. Any investor will take this opportunity to invest and resell the home at a much higher price to gain profit. This is the reason why people who invest in foreclosures are always on the guard for promising foreclosed homes.

    • Nowadays foreclosed homes are abundant due to many families giving up their larger houses and opting for smaller and affordable ones. Typically, these houses are slightly used in some way since most of them are just a few years old. Repairs and renovations are at a minimum for these sorts of foreclosures so investors can still make a decent profit.

    • There are foreclosed homes that are less than 5 years which are readily available once open for auction and resale. Investors make the most money from these types of homes. But expect these homes to be a little pricier than the older homes for resale.

    Cons

    • One of the major downsides of investing in foreclosures is the huge risk involved. There is no guarantee that each time an investor will resell a foreclosed home will yield him profit. In fact, many investors have lost money and gone bankrupt. Usually, making the wrong decisions and lack of research cause this to happen.

    • Competition is another downside to investing in foreclosures. Those investors who are taking too much time in monitoring foreclosures have slim chances of profiting. The key is to act quickly with foreclosed homes by finding them and not by waiting for them to come to you.

    • Lack of research, market knowledge and exposure to this business will cause catastrophic results. If you are planning to dig your hands into this business, you should be prepared to face the harsh consequences.

    Dealing with foreclosure investment is not for a newbie. It takes a lot of research to succeed in investing foreclosure homes. But the truth is there is no sure way to profit each time.

    Those investors who have gone through success have failed many times prior. Knowing the pros and cons of buying foreclosure homes is vital to any starting investor. But keep in mind that anything could happen, even in the most desirable conditions.

  5. Cindy Gonzalez said:
    on July 9th at 11:03 am

    When buying foreclosures, buyer beware…this is not always a wise investment…you must know your market.

  6. Cindy Gonzalez said:
    on July 9th at 11:04 am

    http://www.HomeInvestorToolBox.com

  7. Shaunta said:
    on April 20th at 09:01 pm

    Question??? I want to purchase two foreclosure homes, get them rehabbed, and sell them when rehab is complete. I have built rapport with licensed contractors who can rehab the homes. What kind of loans can you get to invest in foreclosure homes? That is where it is mind boggling for me. I was reading that you have to use FHA 203K and RHS loans to occupy, not to invest. What loans can you use to invest in foreclosure homes?

  8. Gino Capano said:
    on October 1st at 11:11 am

    Good article on foreclosed homes. Very helpful.

  9. Jameson said:
    on April 7th at 08:29 pm

    There’s some really good advice here, especially the part about not paying for foreclosure lists.While research foreclosure strategies, I came across an ebook that really gets into the nitty gritty of buying foreclosed homes, how to do it and make money. If you’re interested, I found it at profitsinforeclosures.com. Good luck!

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