If you're looking for a bargain home purchase or looking to turn a profit, consider locating a foreclosure property - one that has been taken away from an owner for delinquent payments.
Home buying has been one of the more stable investments of the last century. If bought with forethought and patience real estate can create a financial future for you and your family faster than you can say “stock market”. In doing your homework you will make a path to a strong home purchase that will never put you in the category of foreclosure.
WHAT IS FORECLOSURE?
A foreclosed home is one that someone else is unable to pay for. The lender, a bank, individual, or company that has loaned the money for the initial purchase, takes back the property from the delinquent homeowner.
Steps to a declaring a foreclosure and taking the property back will vary slightly state to state. A bank will want to turn over the property quickly and not hold on to it so foreclosed properties will be discounted at a high rate. That means getting the purchase prices cut by up to thirty percent or more in some cases.
FINDING A FORECLOSURE
Foreclosures are a difficult animal to locate and to execute. The potential is what usually draws people into the process. Turning them over for a profit is a motivating factor.
Look for foreclosures in real estate magazines, local newspapers and on the Internet. Lenders will often have a department that handles REO, or real estate owned. Call your local lenders and ask for their REO listings. Fannie Mae and the Department of Housing and Urban Development, HUD, also have foreclosure listings. Also worth noting, any lender who has decided to foreclose must file a notice of default in the county clerk’s office where the property resides. The county may be the best place to locate fresh foreclosure leads.
BE PREPARED
Foreclosures bring with them their own set of difficulties. Because the prior owner was obviously in financial straights (who would give up a home in the first place, right?) it stands to reason that other difficulties may have pushed them to failure and liens might have been drawn against the home. Know what the foreclosure brings with it by doing the homework. Check for liens and unpaid property taxes and locate who is responsible for paying those. Making sure these are cleared up before making an offer is advisable. Check for these in the county clerks office where the property is located.
Purchasing foreclosures requires more paperwork than should be legally allowed. This is especially so when a government agency is involved in the purchase. To protect yourself make sure you have a real estate agent that is well versed in the foreclosure process. Have the agent check pricing in the vicinity of the foreclosure to make sure what seems a bargain is a bargain. This will have much more meaning if you are intending to resell the property and are hoping to gain the discount you were given as profit.
Arrange a home inspection. Foreclosures can have a lot of damage if the owner’s were financially negligent for any length of time. If you cannot pay the mortgage chances are you were not keeping up with typical home maintenance needs as well. Neglected maintenance can lead to long-term problems that may include water leaks and foundation issues as well as termites and infestation problems. Tour the property yourself to make an initial assessment but make sure a professional inspector is hired.
Foreclosures can be difficult. Most people are motivated by the possibility of a large profit and forget to fill in the blanks. If you will do the homework a foreclosure purchase can occur in a smooth manner.
http://www.essortment.com/home/homebuyingfore_smyu.htm
