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How to buy foreclosure
Step 1 : Find a foreclosure home
Buying a foreclosure can always begin with joining the free trial of foreclosure listings. You need to first decide where you want your property to be. If you want a place with city life you can choose New York City and California but if you want a country side kind of life style, try looking at Arkansas. You may search foreclosure by county, city or zip code. We recommend starting with a broader foreclosure search (like county or city) and narrowing the search later. This is to maximize the opportunity of bargain. Besides finding through a location, you may approach buying foreclosure through identifying the property type or foreclosure status. Bottom line is, you know what you want to have and identify the them from the listings.
Step 2 : Study the foreclosure
Once you identify a potential good deal, you need to study on them. Basically all the properties have the same set of documents that you need to go through but each of them are unique. Therefore you need to look carefully on the numbers. Good foreclosure listings should provide you the comprehensive details on the properties which we think it should include and not limited to the address of the property, name of the owner, trustee or lender, an estimate of the unpaid loan balance, the property descriptions and photos, brief taxes and liens history. The balance loan amount provides a good estimation on the selling price of the foreclosure and using this you could draw a clear line in setting your goal.
Since you have already known the address and location, you could also make a trip and inspect the neighborhood of the foreclosure. If you are buying the foreclosure to stay, you better make sure the neighborhood is clean and is not full of foreclosure activity. You do not want to stay at an area where most of them are empty house do u? But if you are a investor, neighborhood is not important as what determines the value of a property is the location. If the location is a business center or the center of future development, your return will still secure no matter how the neighborhood looks like.
Step 3 : Get Financing
Once you identify the property, you should right away get pre qualified and finance. By getting finance you will know what you can afford and you are clear whether you should continue with the deal or not. In fact some people suggest this step to be the first step in property hunting.
The point here is people will only take you as a serious buyer if you have done your part. Even agents and realtors will only work with people with proper credit reports and documents. Clear enough, to make sure the transactions go smooth, get ready with your credit score. Another plus point here is you might be entitled to a lower mortgage rate with the reports. But this one is based on the negotiation between you, the agents and the banks. So bottom line, you need credit reports to proceed if you want people take you seriously. Here is a link to get your credit report if you have not yet got it.
Step 4 : Contact an agent
If you are a first-time homebuyer, you are strongly advised to seek service from the agents. They are who they are for reasons and they are capable in handling real estate issue. Getting the professional to do what they are trained to do will definitely get the job well done. A good agent will usually be able to guide you through the whole process and be the turnkey provider in the whole transactions. They have close connections to bankers, lawyers for their daily business. Most of the time they have even become friends and play golf together during weekends. These are some advantages you can have doing business with agents. But if you insist to work the way out of yourself, that is perfectly fine too as long as you have the time and knowledge to conduct appointments and meetings with banks, and relevant parties. You should be prepared that there will be quite some things to work out.
Here are 2 links, one to ziprealty find a realtor, the other one is google search on real estate broker
Step 5 : Make an offer
After you are done preparing all the necessaries, you are ready to make an offer to purchase. But questions will be what your offer should be? To get an estimation on the fair offer, you need to find out the market price and how much is owed on the property and if the owner has any other loans and liens encumbering the property. This information is usually available in foreclosure listings where you can also compare the selling price of houses in the neighborhood. That will give you a feel how much your potential deal is. If you have done inspection on the house, you might want to factor in the renovations and house cleaning cost into the offer too.
After doing your research, you can now make an offer. Usually the offer amount is somewhere below the market value but above the total outstanding liens and estimated repair costs. If you are buying at foreclosure auction, you will need to place the offer during the bid. If you are working on pre foreclosure or REO, your offer will be something similar to a normal purchase. If you are not comfortable in deciding the offer, you can always seek opinions of your agents. They can be very resourceful.
Finally you will get your dream property in the end. May be you will find the process is not as easy as you expected but hey, who told you it is going to be easy? But the fruits from your effort will be paid off in the end for the high return. Back to bottom line, if you want to be done in an easy and fast way, first you locate the foreclosure you want to buy, and then contact the agents and leave everything to the agents. More effective but a lower margin of return because of the services you are buying for agents.
Happy foreclosure buying!
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