You are looking for a new house, you start reading the real estate ads and suddenly you run into the phrase: “Properties in foreclosure”, and you think: “Mmm … can I do a good business here?”.
Do not worry; you’ve come to the right place. Below you will find some tips and tricks that will help guide you in the purchase of houses in foreclosure.
How to Buy Foreclosure Homes (Beginners Guide)
Do a Detailed Investigation
Earn the trust of a real estate agent that is related to specialized banks in foreclosure auctions. Look for web pages that contain lists of foreclosed homes for sale, not to look at homes, but to find an agent. If you find a banking agent, you will do yourself a great favor, for two reasons:
You will not have to pay double commission. Many times you can work directly with the banking agent to close a deal, omitting the need to hire your own real estate agent, who acts as another intermediary. The fewer intermediaries involved in the sale, the less money you will spend.
Banking agents often have access to private lists of houses in foreclosure. These agents often examine such lists for up to a week before making them public. If you ask them about these lists, they will take you to a hidden treasure: houses in foreclosure, but that have not yet officially come on the market.
Get a pre-approval letter from your lender before beginning to seriously investigate. If you do not have a pre-approval letter that describes how much money you can borrow, you will lose great opportunities. Since the real estate market moves very fast, buyers often do not qualify for financing after they have found the ideal home.
Do not assume that you will obtain financing from the same lender that sells the house in foreclosure. Although the same institution that sells the house could also be dedicated to financing, they may not have the best offer; In addition, the two areas (embargo and financing) do not necessarily work in tandem. It’s similar to buying a car, getting financing before going to the dealership is often the best option.
Familiarize yourself with the laws of your country. It may sound boring, but being sued for property damage for not having used the proper font size is not funny at all. Not respecting foreclosure laws can cause more than one hassle. Do not trust your real estate agent, if you decide to have one, to give you legal advice.
Think twice before speculating, especially if you have never done it before. Speculating homes in foreclosure is very complicated. The previous bank (the sellers) will not allow you to make renovations to the property until it is yours, and the current bank (the financiers) will not let the property be yours until you have done the required paperwork.
If property damage or renovations end up costing you more than you expected, or if you can’t find a buyer quickly, your new home could become a volatile asset.