Repossessed properties include single-family, condo, apartment communities, commercial property, developed lots, raw land and mobile home listings.
If you’re bargain hunting keep in mind to devise a good exit strategy for unloading the property. Remember, your exit strategy is where you get paid, so give plenty of thought to how you are going to get out before you get in.
Depending on the region you decide to purchase an investment house in, you will find there are multitudes of foreclosed and distressed properties on the market, from two-bedroom starter homes to 20-room mansions.
Homeowners unable to refinance, but still with plenty of equity can simply put their houses on the market, while those underwater can plead with their banks to let them short-sell for less than they owe on the mortgage. Those who can’t sell before they’re foreclosed on will be evicted and their houses auctioned off. Whether on the steps of the local courthouse or through private sales, bidding typically starts at or just below what’s still outstanding on the mortgage, plus fees and court costs which isn’t a deal if the property’s market value has sunk below that.
Often the bank takes back the house and hires a real estate agent to sell it, sometimes at far less than what was owed on it. Here is an overview of the different stages opportunities to buy on the cheap.
This entry point offers both the best and worst of the often messy business of investing in foreclosed property. If you can contact a distressed homeowner as soon as or even before his troubles become public knowledge (usually in the form of a notice of default listing in the newspaper), you’re ahead of the competition and in position to work out a deal.
Find your ideal investment house, head for the courthouse steps, and bid whatever you think the place is worth. Unfortunately, the public auction stage of the foreclosure process rarely presents easy pickings. Although the exact method of disposition varies widely by both state and county, the general process is that the homeowner is sent a notice of default and given a certain amount of time (usually about 90 days) to cure the loan and bring payments up to date. If the homeowner doesn’t, the bank then sues to repossess the house and the court or a trustee then auctions off to the highest bidder.
Equally rare are situations in which homeowners who still have equity are
The last stage of the foreclosure process may offer the smallest upside over the short run but the surest investment over the longer run. By the time a homeowner has been foreclosed on and evicted, plenty of would-be investors have already had and passed up their chance to buy the house (usually for good reason).
Unable to get what it’s owed, the bank then hires an outside real estate agent to put the place on the market, usually for somewhat less than what was originally owed on the mortgage. Spying a potential deal, would-be investors then circle back. Free now to tour the home and do all the due diligence needed to make an informed decision, many nonetheless continue to low-ball the bank and get rebuffed in the process.
Regardless of what stage you choose to buy as an investment, you will need to do your homework. You may want to work with a real estate professional to guide you through the process.
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