Buying a Foreclosed Home in Sumter, SC Part 5
The Reason for Buying a Foreclosure
Things are quiet with the purchase of the Sumter, SC foreclosure as we are waiting for the checks to clear the bank and the paperwork to get processed. We are on track for closing November 13th (a Wednesday, for all those who are superstitious) and getting geared up for the work that needs to be done.
So for the next few posts in this series, I am going to cover some other information about buying foreclosures. This post is about the reason behind buying foreclosures or the type of buyers. There are many reasons to buy a foreclosure and these reasons determine what the purchaser is willing to spend. I will cover the most typical reasons for buying, but I am sure there are many, many more out there.
The first buyer is an owner occupant. Many owner occupants are purchasing a foreclosure to be able to purchase more home than they could if they were buying from an individual OR they want to be able to build some sweat equity in their home from the beginning. Owner occupants typically are looking for homes that they can finance. The homes are in better condition and need cosmetic improvements. The roof, structure, heat and air unit and appliances are normally in the property. Depending on the lender and what type of financing is available will determine what condition home an owner occupant can purchase.
The second buyer is the flipper. The flipper is looking for a property they can purchase for the lowest price possible. They will purchase the home and do the work necessary to sell the home at an increased price. Flippers will typically upgrade older homes and do cosmetic repairs, but some will get into larger projects changing the structure. But the flippers bottom line is price vs. resale.
The third buyer is a straight investor. They will look for properties that need some TLC or may need extensive work. They are looking for properties that will rent easily after being purchased and need little to extensive work completed. The amount of work being done will depend on the investor and what they want to obtain for rent. Straight investors while looking for immediate equity are also looking for long term gains on the increase in the value of the property.
Due to the difference in the purchasers, there are different prices for the same property that each buyer is willing to consider. When going into a property, the buyer needs to be aware of the comparable home sales in the area to the property, what repairs are necessary or desired, what “profit” or equity does the buyer want out of the property and carrying costs or resale costs. All these will factor into what a buyer is willing to pay for a foreclosure in Sumter, SC.
Buying a Foreclosed Home in Sumter, SC is an ongoing series of posts, where I am purchasing a foreclosed property to turn into a rental income property. Follow the posts below to experience the entire process with me.