How to Buy Distressed Property and Profit
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One in every hundred mortgages in the US is in foreclosure and one in four people are behind with their payments. Foreclosed property generally sells at a knock down price. For the prudent here is a time to buy property at a price far below the market value. You can do this for investment or it’s a shrewd way to get a better house. First you have got to find the property. You will not find it in your real estate agent’s listings. You will, but not at the price the Realtor paid. He got it cheap and is now turning it for a handsome profit. You can search on the Internet. Googling “Foreclosed property for sale in the USA” will take you to many listings. Some you will have to pay for, and the information may be out of date.
You need a friendly Realtor: If you deal with the selling agent he/she has a vested interest in the sale. Your Realtor does not and will give you more independent advice. Besides he subscribes to the MLS listings and will have information about the property available at his fingertips. You may ask what is in it for your Realtor? That’s simple he gets the commission. In actuality everyone works for the seller because he pays the commission.
Time is the essence: You must work quickly and you have to close on the dates specified otherwise you will have to pay expensive penalties that are generally calculated on a daily basis.
Get your finances in order: Get pre-qualified for a loan as soon as possible, if you are paying cash get the funds untied and available. When funds are in order the Realtor can submit an offer.
Get estimates from contractors for repairs: Get several bids from contractors on any necessary repairs. If you plan on doing the work yourself make sure the job is within your realm of competence. You don’t want to get stuck with a job you can’t complete.
If you plan to sell for profit: Get your Realtor to search for similar properties in the neighborhood because you need to have a realistic market price in mind from the outset. Costs need to be kept down so that you release a profit on the deal.
Special warranty deeds: Don’t worry if you receive a special warranty deed rather than a general warranty deed. Buy title insurance and you are covered. If in doubt use an attorney to close rather than a titling company. This insures any legal problems are sorted out and the cost is very little more.
Foreclosure properties are potentially the most profitable in the market, but they need special knowledge and special contracts. Overall, you need to be working, at least on the first occasion, with someone who knows what they are doing. By using a Realtor experienced in the field you get the paper work completed correctly and in time. Learn from the Realtor and if you plan on speculating in this manner, you are learning the steps to what hopefully may become a lucrative business.
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