Foreclosed homes are a great investment opportunity, and there are many of them on the market right now. While the rise in foreclosures has a negative impact for many, foreclosures have definitely spurred the real estate investment community. Our
Miami Foreclosure Team will guide you through the process of purchasing foreclosed property in Miami as a path to profit.
Foreclosure Basics
A foreclosure is usually a home that is owned by the bank due to the previous owners defaulting on their mortgage. Typically, the bank will try to sell the home as quickly as possible. To secure a quick sale of the foreclosure, the bank will often sell at a low starting price ... and this is what gets investors excited about buying foreclosure properties in the first place.
The Basic Process
1. Get Your Pre-Qualification in Order
Banks want to make sure that when they get an offer on a property that it is coming from a qualified buyer. They want to go straight to closing and not have to wait and see if the buyer qualifies. They need to sell and move on to the next headache. Pre-Qualification letters are now required by all banks along with any offers. Proof of funds are also required on cash offers. Securing a Pre-Qualification letter is rather simple. Your loan officer or Mortgage Broker will need to confirm your income and run a credit report analyze your debt to income ratio and will provide you with loan amount that you Pre-Qualify for.
Before you can buy a foreclosed property, you have to find a
Licensed Realtor who has a continuous stream of
foreclosures available. You need to start filtering through the inventory and identify the price ranges being offered in the different communities. Good deals go quickly....sometimes in just a couple of days. You need to work closely with a knowledgeable
Realtor or develop the skill to quickly identify a great value when you see one.
3. Considering the Upside, But Also the Downside
Like any other type of investment, buying foreclosure properties carries a certain level of risk. If you buy a foreclosed property that later proves hard to sell, you will be stuck with a mortgage payment longer than you want. If renting the property generates a stream of income that covers your mortgage payment, property taxes and all other costs involved in maintaining the home, you then can hold on to the property for a longer period awaiting a recovery of the real estate market.
4. Making Your Offer on A Home and Not a Money Pit
Working with a knowledgeable
Realtor is crucial while making your offer. You want to make sure that you are protected with inspection periods and plenty of outs on the deal if the home doesn’t seem to be what it appeared to be. You also want to make sure that you negotiate any fees, Title Policies or seller contributions wherever possible. Remember that hiring a
Realtor to represent you during your purchase doe not cost you the buyer anything. The
Realtor fee is paid by the Seller.
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