Home > Blogs > Debbie Nieman > Debbie Nieman's Blog

Investing in Foreclosed Homesd

By Debbie Nieman

Real Estate Agent with Keller Williams Sonoran Living SA572600000

February 16, 2013 09:46 AM

Investing in Foreclosed Homes

There are tens of thousands of foreclosed homes on the market today, and plenty of buyers are taking advantage of the low prices on these homes.

Investing in foreclosed properties may seem like a great idea – you buy a foreclosed home at auction for a ridiculously low price, and then quickly sell it for a large profit. Typically, foreclosed homes are priced about 30% below the market rate, and can be a real bargain. But in reality, finding a good deal can be more difficult than it sounds.

Here are some tips to help you and what some of the pitfalls are:

Know what the home is worth in your market. You have to have a good idea of this in order to make a profit.
Have Cash. If you plan on buying a foreclosed home at an auction, you must have cash. Be careful though, buying at auction can be a risky process. The houses are sold “as is”, with no guarantee about the condition of the home, and the house may be in such bad shape that the money you spend on improvements and repairs could wipe out any potential profit.
Check and make sure there are no liens on the property. You can search public records yourself or use a title company.
Try and buy from the lender to be safe. Bank owned properties are safer because there are no liens and no tenants to evict.
Think carefully about “flipping” a home. Flipping a home is buying a cheap foreclosure, fixing it up and quickly reselling. If you spend too much on repairs or don’t sell the house too quickly, you can end up losing money.
Pay for a thorough inspection before you buy the home. These homes are sold “as is”, so the lender will not make any repairs. And be sure to get some bids for those repairs before you buy so you’ll know, financially, what you’re getting into.

Here are the current foreclosure and distressed sales numbers for Phoenix (Maricopa County).

Please visit my website for information on specific neighborhoods and areas in the Valley.