- Posted by The Upfront Mortgage Broker
- Buying your first home? Want to buy a rental property? Considering a foreclosure purchase? Read on…
More and more people are interested in learning about foreclosures for numerous reasons. Some people are looking for inexpensive housing so that they can invest “sweat equity” to have a nicer home than they couldn’t normally afford. Other people are looking to buy and flip a property quickly for a profit, which probably won’t happen in the current market (just my opinion, do you agree?). Others are looking to acquire foreclosures to use as a rental property.
- Being successful at purchasing a foreclosure requires some preparation. Most sellers of foreclosed properties require a minimum amount of earnest money to accompany any offer to purchase. The first steps you should take are as follows:
- · Find a real estate agent that can help you identify foreclosure properties as soon as they come on the market. Time is of the essence in all real estate transactions, but even more so in the foreclosure market. Click for a list of Realtors that can help you with Orlando area foreclosure properties.
· Have enough cash on hand to meet any minimum earnest money requirement, sometimes 2% or more of the purchase price. The more earnest money you put down the better your offer looks to the Seller.
· If you will be borrowing funds to purchase, get pre-qualified by me first. Most Sellers require evidence of qualification or proof of available funds (cash) to be submitted with any offer to purchase.
· Be prepared to move quickly. A foreclosure that is priced to sell will not stay on the market long. Expect negotiations and the entire process to take longer than if you were buying a home from an individual though.
· Have a team of contractors available that you feel comfortable with and that will give you written estimates of repair costs in a timely fashion. This will likely include people who do carpentry, plumbing, drywall repair, carpet and flooring, roofing, septic systems, field lines, electrical repair, heating and air, etc.
· Know the local market where the foreclosure is located. Have your real estate agent prepare a Competitive Market Analysis so you can see how much homes in the area are selling for. This is key to knowing how much you should offer for the property.
· If possible, make the offer to purchase contingent upon an inspection of the property. Make the inspection period as short as possible for you to complete inspections and receive bids from contractors for repairs. An extended inspection period will make your offer less attractive to the Seller.
· Expect to find additional problems with the property than you originally identified and budget accordingly. There are frequently property defects that are not identified until renovation begins.
- Following the suggestions above greatly increase your chances of having the offer to purchase accepted. Making the transaction successful/profitable from this point depends on your end goal.
- The most common pitfalls that snare the novice investor are as follows:
-
· Underestimating the cost of repairs.
· Paying too much for a property.
· Getting a good deal on the initial price and needlessly investing too much in repairs or upgrades. The old adage, “You never want to own the biggest or nicest home in the area” applies even more to an investment property.
· Taking too long to get the property ready for resale.
· Not knowing how much comparable homes in the area typically sell for.
· Trying to maximize profit by selling For Sale By Owner. This limits exposure to potential Buyers and can increase the time to sell. Remember, every day the home stays for sale means more expenses for insurance, interest and taxes.
- Investing in foreclosure properties can be financially rewarding if you take the time to prepare yourself. You should be cautious, but not so much so that you miss an opportunity. Surrounding yourself with the right support staff consisting of a good lender (me), a Florida real estate agent, and contractors will be key to your success.
- Respectfully,
The Florida Upfront Mortgage Broker
Joe Bartolotta
Residential, Commercial & Reverse Mortgages
Direct 407.340.0220
Joe (at) the upfront mortgage broker (dot) com
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[...] Buying Foreclosure Property – The Florida Upfront Mortgage Broker gives you great tips on buying a foreclosure property. What to expect and what to be wary of. A must read. [...]
Thanks for the comment.
Joe
[...] 16.Buying Foreclosure Property – The Flordia Upfront Mortgage Broker gives you great tips on buying a foreclosure property. What to expect and what to be wary of. A must read. [...]
Thanks for the info, you seem to be a genuine person. I already feel a connection with you. When I am ready to buy, I’ll be calling you first.
Great info regarding reverse mortgages and buying foreclosure properties! Thanks Joe!