Everything you wanted to know about Short Sales and Foreclosures - Click Here
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Guide To Buying Foreclosures | |
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Step One |
Educate yourself! The first step is to learn as much as you can about Real Property and the process of owning Real Property. Since the process of buying a foreclosure is quite a bit different than buying from a private seller, you must do research, ask lots of questions and read articles like this one. |
| Step Two |
The next step, if you have decided to pursue a foreclosed property know your credit score! You will also need to be pre- approved by a lender or have "Cash" money to make an offer on a bank owned property. Cash refers to paying in full, or partial with negotiable terms. |
| Step Three |
Find a licensed Realtor that specializes or is familiar with foreclosures. Interview them for the job. You are hiring them for their experience and skills! Ask for referrals and references. They will know inspectors, contractors and about additional financing options. This is also the time to open yourself up for other opportunities. Not all foreclosures are a good investment. If your local Real Estate market is depressed, private sellers may be willing to "Dump" a property in better condition for a better price than all of the repairs, money and time it will take to rehab a foreclosure that may have been vacant and in neglect for a year or more. |
| Step Four |
If you have a good working relationship with your Realtor you should have some prospective properties to consider. Do a "Drive-By", take a look at the neighborhood. You may not be allowed to approach the property without the agent or a legitimate offer. Do your best to use the information you have (square footage, number of rooms and lot size), to determine if the property will meet your needs. Research the area. Are you planning to rehab and "Flip" (resell quickly)? Or are you planning to live on the property or rent it out? If you plan to resell, research the market. If nice homes are not selling, why should this one when it's finished? Remember, even in a depressed market houses DO sell. It's usually based on price and availability. If you plan to live in it or rent it out, what remodeling will need to be done to make it habitable? Finally, realize that some properties must be acquired very quickly if you want it and others are interested. |
| Step Five | Realize that many Foreclosures are sold AS IS. That means NO contingencies (inspections or loop holes allowing you to get out of the deal). Also do research, some structural repairs and environmental concerns might be negotiable or required by law! Inspectors could include, Home inspectors, Structural Engineers, Pest Inspectors, Mold andEnvironmental inspectors, etc. You will be required to pay these inspectors regardless of whether you actually purchase the property or not. |
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Step Six |
If the property has passed your financial analysis, inspections and you are ready to move forward, it's time to submit an offer. Your Realtor will walk you through the process. Your offer should benefit you while enticing the bank to WANT to accept it. In closed Bid or multiple offer situations, you must use you best judgement with the advice of your Realtor. Formulate the highest price you are willing to pay, add the estimates for repairs and labor, then add an additional 10% for error or unexpected developments. Decide if it makes sense to you. Trust yourself and Representative. Some negotiations can take weeks, even months, especially with bank owned properties. |
| Step Seven |
In conclusion, the difference between investors and individual buyers is the motivation. An investor has only themselves to blame if their investment turns out to be a HUGE liability. |
| For list of Foreclosed properties in Hillsborough & Burlingame fill in Request form | |