At the rise of foreclosures properties, everyone wants a piece of them. But in reality, most of these properties need some work and are not suitable for every buyer, as a cheap price can create a financial burden if repair/fixing costs between other costs, are not taken in consideration. Here are some questions to ask before dealing with foreclosures:
Im new into foreclosure, what is the first step to take? Get prequalified. This step is a must for any type of purchase. For buyers that are buying the foreclosure as an investment or second homes, be aware that the financing for this type of property could be more difficult and more expensive than buying your first home. For example, lending institutions can charge a higher interest rate or ask for more money as down payment. Also, most of the foreclosures do not qualify for regular financing due to property conditions. Cash buyers have the best bargaining position.
If I buy a Foreclosure and want to resell for a quick profit, is this feasible? This is more of a numbers game, I recommend buyers to do their homework before buying these type of properties. Keep in mind the folllowing expenses: Maintenance (landscaping,etc), carrying costs (mortgage payments), vacancies expense (time when the property is not rented), selling expense (cost of selling like commissions, taxes) and other related expenses. I advise that after these expenses, add a 10-15% as an extra cushion.
What other things should I consider when buying a foreclosure? Foreclosures can be a great investment, but making a good investment decision is not as easy as it looks. Be aware of first and second mortgages debt from the previous owner, Liens, past due taxes and previous home line of equity if any. This all could be responsibilities transferred to the next buyer.
When is a good time to buy a foreclosure? This is a question everybody asks. I think it depends on the market conditions locally (supply and demand of properties). This will vary from market to market. For example, in a market where the prices are falling constantly, take this factor into consideration before buying on this area. I belive in buying the ugly house in the good neighborhood as a rule of thumb.
If you are considering buying a foreclosure and need help, you may reach me at 305-801-7347
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