Tips on Buying Distressed Homes (Foreclosed or Short Sale)

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To some individuals, the idea of buying a home in distress is a turn-off of sorts; however, the truth is, there are some real hidden treasures marked with the signs of "Foreclosure" or "Short sale," and many buyers do themselves a disservice by writing off these opportunities before giving them any thoughtful consideration.  Yet some have caught on to the great advantages that lurk around the corner when trying to find a home; curious investors, newly formed families and large companies seeking new headquarters, are all giving distressed properties a chance.  But often times they wonder just when, and how, the scramble for distressed property purchases ensues.  This article will give you some ideas and a glimpse into the area of real estate that has been steadfastly taking the spotlight over the past several years.

Locating Them

Whether you are looking for a place to call your own or looking for investment purposes, foreclosed home, short sales and tax lien properties can be a great deal.  Here are some tips on how to locate these deals: 

  • Drive specific neighborhoods looking for that sheriff's paper on the door.  Realtors do this, and you're completely capable of doing so yourself. 
  • Reading public sections of local classifieds will reveal Sheriff Sales, open auctions and filings.  This is public information, in other words; tap into your local courts or recorders' information databases. 
  • Word of mouth is nearly always a good tactic.  Locations you visit often can be the best sport to hear about a family in financial trouble and foreclosing on their house. 
  • The Internet.  The world is at your fingertips when it comes to teh internet, get on google and search and search some more. 
  • Foreclosure services.  There are many services out there that specialize in foreclosure and direct you to the best deals

Bargaining Prices

The glitz, glamour and beach effect still means something when buying distressed properties, except those facts just aren't as heavily factored in the buying thought process.  Banks want funds recuperated, mortgage brokers need to make their cut, and real estate brokers want their commission.  Therefore, it's always best to:

  • Valuate surrounding homes since they contribute to your home's potential end value. 
  • Find out the true appraised value.
  • See past sales history, and weight them against asking price. 

​Depending on how informed, organized, and determined you are, owning freshly foreclosed or distressed properties can invigorate you finances.  (With no due diligence they may haunt your finances) Many banks want consistency in mortgage payments of which, of course, falls apart after foreclosure. If payments aren't coming in, private sales or quick purchases are often sought to recuperate the principle loan balance, creating the perfect time and scenario for homebuyers and/or investors like you, with just enough cash, to make a move and snatch the property up. Good luck on your search!

 

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