Before You Buy a Foreclosure

BEFORE YOU BUY A FORECLOSURE
Get Answers to These Important Questions

Before you make an offer to buy a property in foreclosure, consider your answers to these 4 questions.
1. What’s the first thing a buyer should do?
As a popular movie once said, “Show me the money!” Do you have cash or will you require financing? In either case, you have to demonstrate you can perform. This means proof of funds for a cash buyer (usually a bank statement) or a pre-approval letter from a lender indicating how much you can borrow.
2. Is this a good time to buy a foreclosed property?
Local market conditions vary so the answer to this question is different depending on location. Buyers in metropolitan Detroit face a much different market than buyers in southern Florida for instance. Contact a Realtor to confirm your impressions of the local market. Prices declined in most major metropolitan areas in the U.S. during 2008. Foreign investors and domestic investors are purchasing in bulk, signaling for them at least, it’s a good time to buy.
3. How can you tell a bad deal from a good one?
Due diligence is a term that means you’ve done your home work. A reasonably prudent investor will thoroughly research details of a potential investment before completing a sale. Unpaid liens, back taxes, outstanding water & sewerage charges, clouds on the title…the list can be quite long. An attorney, a housing inspector, an experienced real estate broker all can work on your behalf to help you avoid the special challenges of buying a foreclosed property.
4. How does neighborhood location affect foreclosure investment properties?
Location, location, location-- the 3 most important things to consider when deciding whether to buy or not. Avoid purchases in distressed and blighted locales. You want to reasonably expect that vandals and thieves won’t strip your property as soon as you leave for the day. Well established neighborhoods are the best to buy in. Even houses needing lots of work can be profitable eventually if you buy in a viable area that has ‘pride of ownership’.
SOURCE: Jan W. Bond, Owner/Broker, Bond Realty LLC, email: janwbond@bondrealty.net