Most foreclosure properties are bought by people looking for properties at lower rates. Profits come easier that way. Conditions in the market warrant that even small investors can purchase one or more foreclosure properties. While this may sound too good to be true, it is worthwhile to consider all the conditions and factors before making such a purchase.
Pre-foreclosure sale: Most home owners who go into foreclosure are already cash strapped and hence cannot spend much on the upkeep of the property, and may not get the needed repairs. It is during this period (which is like a grace period), that the owner is warned about defaulting. Investors can come up with an adequate offer which is competitive, whereby allowing the homeowner to repay his loan.
Bank-owned properties: A foreclosure generally takes place when a property owner is not able to repay the mortgage on that property. These are generally the safest deals for inexperienced foreclosure buyers. As banks look for a quick sale to recover the money, they offer incentives and benefits to the buyers. The prospective buyer will have to keep a cashier’s cheque ready with the full amount. The final buyer is offered the house in an “as is” condition. Foreclosure properties bought in areas with good price appreciation are a good investment.
Buying a property in the pre-foreclosure stage is generally the most rewarding in terms of benefits. It is also the most difficult however. Renovations are generally much needed in such properties and this appreciates its value greatly. Here are a couple of tips for people buying a foreclosure property in Bangalore.
Locate properties
Newspapers generally carry a list of foreclosure properties under the Foreclosure Notices section. Once this is done, the next step is to check if there are any liens on the property. After the above is determined, one can start contacting the concerned people to buy the place.
Determining the condition of the property
As the previous owners are already low on cash, hardly anything is spent on maintenance of the place. The property should be looked at properly to determine the value and the condition as this is a fair indicator of the amount of repair that a place needs.
Discover market values
As foreclosure properties are mostly sold at below the market rates, one should get a feel of the market conditions by attending a couple of auctions. This helps understanding the procedures behind acquiring such properties.
Hidden foreclosures
This is so named because of the lack of promotion, which makes it difficult to find on multiple national listing. These are generally connected to the newer homes which were not bought before the end of the construction loan period. Professional real-estate agents are called to take care of the dealings of such properties.
Bank Owned Addendum
This is a legal document that is usually attached to the sale and purchase agreement by most banks when dealing in Real Estate Owned (REO) properties. This is prepared by an attorney from the bank and is non-negotiable. Once the terms and conditions are agreed upon and signed, the buyer’s agent also does the same. This entire process of purchasing a bank owned property takes around two months to complete.
If one can find a way to contact and meet the owner of a property before it gets foreclosed, then there are chances that the deal can be cracked at a fraction of a cost of what the bank would look at for any property (which it seizes and offers to the public). If researched properly, then buying a foreclosure property is a very good investment as a little renovation and repair work increases the value of the property substantially.
