Short Sales and Foreclosures
Five Rules for Purchasing a Short Sale or Foreclosure Property
Short sales and foreclosures are among the best bargains to have. The real estate market still has buyers clamoring for these deals. They also carry a higher level of risk. Short sales and foreclosures are thought to be good deals by 80 percent of adults that were recently surveyed by the American Society of Home Inspectors.
Since the end of 2012, analysts have felt a rebound is underway, and the prices of homes may rise. Buyers may be looking at the last opportunity to realize benefits of low-interest rates and affordable properties. A few rules to follow that will provide some certainty in investing in bargain properties before the market fully recovers are listed here. Adhering to these suggestions shows wisdom in distressed property investment shopping.
Rule 1: Put yourself in a successful position.
Get a mortgage pre-approval so that your offer is the first to be placed on a banker’s desk. You will be in the position to submit a bid before the research for property begins. Short sales and foreclosures can be daunting to someone inexperienced. Best to work with an experienced Real Estate agent who has dealt with these type of properties. He or she can help with complicated and time-consuming bidding. This is especially true when the home sale requires the sellers’ bank approval. A good Realtor ® can navigate through the red tape and stacks of paperwork.
Rule 2: Do the research.
Look for of any liens on the property that have not been disclosed. Find out if property taxes have been paid. Investigate if there are and city open permits and code violations against the property. Research is critical decision-making information. With the help of a professional the Realtor ® you can ensure the contract includes any special assessments, liens, and delinquent taxes are paid before taking property ownership.
Rule 3: Have the property inspected.
An ASHI survey found 84 percent of adults surveyed were more likely to purchase distressed property after the condition of it was determined by a home inspection. Home inspections provide the confidence needed to advance with purchase plans because all possible knowledge about the property has been obtained. The electrical system, interior plumbing, structural components and basement, foundation, insulation and attic, and the condition of the roof are visually examined by an inspector. The inspector should be ASHI-Certified. Many states have minimum licensing requirements. ASHI has a “Find an inspector” tool on their website at www.ASHI.org.
Rule 4: Put repairs in the budget.
The price is only one aspect to consider when purchasing a REO/foreclosure (REO) or pre-foreclosure (short sale). Some sort of repair is almost always required. After receiving an inspection report, estimate the cost of the repairs as well as any energy-efficient improvements you may want to consider.
Rule 5: Do a neighborhood assessment.
Location is a top consideration when real estate is being purchased. It is even more important in a tough housing market. A less desirable area can affect the worth of a home. Buyers are likely to avoid a once-desirable neighborhood that has a high foreclosure rate. Favorable and populated areas, having less economical affects will recover faster than areas with foreclosure rates that are high. Location and price are equally important decisions when purchasing a home.
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