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5 Tips On Acquiring Foreclosure Properties
No investor should feel uneasy with seeing foreclosure properties as great opportunities.
Some people just cannot get over fact that they are profiting from other people’s financial hardship. This leads them to become less decisive in taking action when opportunity presents itself.
However, there is really nothing morally or ethically wrong with eyeing the homes of those facing foreclosure.
You are not the one forcing people out of their homes. If anything, you could be helping them by being the source of funds to pay off their debts.
It goes without saying that getting involved in foreclosure acquisitions require a little extra knowledge that is outside the norms of a typical buy and sell transaction.
Here are some tips that might help you get ready when embarking on this new journey.
1) Finding foreclosure notices
You are not going to find foreclosure properties up for sale in the typical real estate portals containing home listings. And if you do come across one, it basically means that so unwanted is the house that it has gone unsold all the way through the foreclosure process and ended up there.
Foreclosure notices are often posted on the actual homes that are facing the procedure. In certain cases, bandit signs might even be used to entice potential buyers.
Announcements can also be found on authoritative local newspapers where government agencies usually use for notices.
A smarter move will be to register your interest and get in the mailing list of the county Register of Deeds. Then you could get a notice in your inbox whenever notices are send out.
Also, in a judicial foreclosure, the process will have to go through the court. This means that you can find information leads by sieving through court dockets for per-foreclosure notices.
If you are a tech person and prefer to do all your research online, look for the terms sheriff sale. However, be mindful that properties that can be searched online will also mean higher competion.
2) Details of auction
You will be particularly interested in:
- Where the auction will be held
- When it will be held
- And who will be managing it
Some might argue that the most important piece of information is the details of the actual property being auctioned off.
But remind yourself that this is not a regular house listed on MLS or online classifieds with owner who upkeep the house and agents who emphasize on home staging.
Don’t expect a house in foreclosure to be in mint condition. In some cases, home owners who feel victimized might even vandalize the house just to make a point.
You are scraping from the bottom of the barrel. This is why you will be paying a bargain price.
3) Terms of sale
It is paramount that you find out the terms of the sale. Particularly:
- Acceptable form of financing
- How long after auction to complete the deal
The options and terms can vary from auction to auction. So there is no fixed template that applies to every auction.
Sometimes you might even find that certain auctions require immediate payment right after the event.
This is a reason why foreclosure auctions are not in the realm of the average investor as they have no sources of funding to satisfy terms like that.
4) Redemption period
In certain states, the homeowner enjoys a mandatory redemption period.
This essentially means that within this period, the homeowner who lost his property to foreclosure has the right to get his home back if he can find means to repay his debts.
This can really throw a spanner in the works… which is why you need to find out this information.
In some states, the redemption period can stretch as far as a whole year.
5) Property tax
Property tax follows the property. Not the individual.
This means that if you buy a house with outstanding taxes, you will takeover the overdue taxes.
So you will want to find out more about the tax status of the property in question to have a better picture of what you are bidding on.
Finally, it is not recommended that you jump straight into foreclosure properties if you have just entered the real estate industry as an investor.
Your chances of success will be better if you have spent some time dealing with regular transactions to learn the ropes of real estating.