In searching for a great bargain, quite a lot of San Tan Valley investors take into consideration buying foreclosure properties. Although, the means of purchasing a foreclosure can be a bit tricky to navigate in the instance that you’ve never done it before. Be that as it may, with some useful guides on how to successfully buy a foreclosure property – and how to determine warning signs tipping you off to walk away from a deal – you can add foreclosure properties to your next investment property search.
It’s critical 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. Supposing a property has been foreclosed on, the lender would generally want to recoup as much of the outstanding mortgage as they can by offering the property for sale, often at a price below market value.
Once you are inclined to get going on your search for foreclosed properties, your next best move should be to hire 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 could be a needed source of reliable advice and helpful information. Choose agents with certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). These ranks indicate that the agent has attended and completed additional training in foreclosure property deals.
Together with the right real estate agent, you must also make it a point that you have financing lined up and ready to go. Foreclosure deals can move very quickly, so you need to be equally ready to do so, too. 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. The last thing a bank hopes is to sit on a valuable property for longer time than necessary. But they still have to gain as much as possible from it. It is a unique balance and among the reasons why buying foreclosures could be a far more nuanced process than traditional home sales.
Though things are advancing rapidly, 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 may have to offer a bit more than the initial asking price to appeal to the bank or lender. In that event, then this higher price should be included in your calculations.
In the course of the whole process, pay close attention to potential red flags. As an illustration, it is critical to look out for hidden liens on the property. It is common sense to consider that if the previous owners stopped paying their mortgage, they may have failed to pay some or all of their other debts, likewise. 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.
Even though several cosmetic issues are typically present in a foreclosed property, some people may have seriously neglected or even intentionally damaged the property before they are forced out by the foreclosure. Angry owners and tenants have been known to strip the house of anything of value, including copper pipes, fixtures, doorknobs, and even cabinets. Based on how major the much-needed improvements are, you may realize later that what appears like a fine bargain may, in the end, wind up costing a ton of money to repair and improve.
Having foreclosed properties is a decision each investor will need to make on a case-by-case basis. But the great thing is with the brilliant staff on your team and the courage to face a bit of risk head-on, you just might locate and acquire the best bargain property that will pay out for many years to come.
Whether you decide to purchase a foreclosed home or a traditional listing in San Tan Valley, make sure you have the right team managing your investment property. Contact us online or call 480-658-0869 and speak to a team member of Real Property Management East Valley today!
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