In this current market, I believe that buying a foreclosure can be a great way to buy real estate at below market rate. In fact, if anyone is considering buying real estate (commercial or residential), I would recommend that they at least consider what kind of a deal they could get if they bought a foreclosure. Many people fear buying foreclosures because of the unknowns, and that is understandable. There are definitely pitfalls to avoid because you are not buying a property where you have a history or can talk to the previous owner. Usually you can’t even get a home inspection because the utilities are usually turned off so a home warranty is always recommended. That said, lets take a look at some great ways to buy foreclosures.
Get a foreclosed property list
You can find foreclosed property lists that you can find by searching the web but something to be aware of is the the difference between a free foreclosure list and one you have to pay for. Also know that most “free” foreclosure list sites require you to provide your credit card information and then if you don’t cancel within the free period they will charge you. A great site where you can find both residential and commercial foreclosure listings without having to enter your credit card information is Bank Owned Assets (you can also select a paid option). Paying for a list will often get you additional services such as email alerts area and more detailed information on the properties so if you are serious about buying a foreclosure or if you are looking to buy several, having a paid subscription is a great investment.
Working with a Real Estate Foreclosure Expert
This person could be a real estate agent or non real estate agent working as a consultant. The obvious advantage of working with a real estate agent is that often they have connections with banks and know when new foreclosures are about to be listed. They can also write your contract and help you with the negotiations ; assuming they don’t represent the banks best interest so make sure you find our what their relationship is with the bank. Working with a consultant, you will still be responsible for negotiating your own contract and you could use the services of a real estate settlement attorney if needed. The advantage of working with a consultant is that you might be able to get a slightly better deal if the bank is not going to have to pay a real estate agents sales commission which could be as high as 7% or more.
You can do this process all by yourself although I don’t recommend it if you are a beginner. All you need to find distressed homeowners and ideally connect with them before they go into foreclosure. This can be done by placing ads in local papers or enlisting the help of referral sources who can tip you off to those in need of your help. Sometimes real estate agents can be good sources, but of course, they may either want to work the deal or have others they are already connected to that get their hot deals.
In any case, finding the property is just the beginning . You want to have a team of professionals by your side to help you with all of the specifics. These include people to help with doing title searches or make repairs and perhaps a real estate agent to help you list the property for sale when you are ready.
There really is lots of money to be made in real estate, but you need to be cautious, do your homework, and ideally find someone who is doing it successfully to mentor you. Most of all, do not over pay for any of the real estate investor training that is out there as you simply don’t need it.