When looking for good deals, a number of McDonough investors consider buying foreclosure properties. Although purchasing a foreclosure can be a bit tricky to navigate, it’s not impossible. All you need is a bit of experience to guide you. Follow along to get to know how you can successfully buy a foreclosure property – and how to spot warning signs telling you to walk away from a deal – helping you add foreclosure properties to your next investment property search.
It’s important to note the difference between a traditional listing and a foreclosure. While traditional listings are typically homeowners or investors selling individual properties, foreclosures are properties that have been reclaimed by the lender or bank for nonpayment of the mortgage. It’s not uncommon for lenders to try and recoup as much of the outstanding mortgage of the foreclosed property. They do this by putting it up for sale, often at a price below market value.
Ready to begin your search for foreclosed properties? Start by hiring a real estate agent who specializes in foreclosures. These real estate professionals have an in-depth knowledge of the process and the local market, and they will be able to help you navigate your way around the market. Look for agents with certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). These designations mean that the agent has completed additional training in foreclosure property deals.
With the right real estate agent, you can focus on getting your financing lined up and ready to go. Foreclosure deals can move very quickly, so be ready to transact if and when necessary. The most successful foreclosure buyers provide preapproval letters and other documents to the bank or lender in an attempt to demonstrate their ability to close the deal quickly. Banks won’t hold on to a valuable property longer than they should have to. They will want, however, to sell it for as much as possible. It is a unique balance and one of the reasons why buying foreclosures can be a far more nuanced process than traditional home sales.
However swift the deals may be, don’t forget to do your due diligence. Run your numbers and locate comparable properties in the area before making any offers. In very competitive markets, you might need to offer a bit more than the initial asking price to appeal to the bank or lender. In that case, this higher price should be included in your calculations.
In the course of the transaction, pay close attention to potential red flags. A good illustration would be hidden liens on the property. Make sure that this kind of information is disclosed at the very start of the deal. One can suppose that the previous owners failed to pay some or all of their other debts, especially when they stopped paying their mortgage. Unpaid property taxes and other debts can result in liens against the property that will need to be paid before the title can be transferred into your name. Another big red flag is serious repair issues or missing things.
It shouldn’t come as a surprise that a foreclosed property has cosmetic issues. There are some, however, that have seriously neglected or even intentionally damaged the property before they are forced out by a foreclosure. Angry owners and tenants have been known to strip the house of anything of value, including copper pipes, fixtures, doorknobs, and even cabinets. Again, before making any commitments, be thorough in your due diligence. You don’t want to buy a property for a great deal, only to find out later that it cost you more to have it repaired.
Buying foreclosed properties is a decision each investor will need to make on a case-by-case basis. You can dive into deals unafraid if you have people who are willing to dive in with you. Find a good team of property investment managers who will find you a bargain property that will pay out for many years to come.
Whether you decide to purchase a foreclosed home or a traditional listing in McDonough, make sure you have the right team managing your investment property. Don’t hesitate to contact us online or give us a ring at 770-506-1237 to know more about what Real Property Management Anchor can do for you.
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