Real Estate Investing Forums

Real Estate Investing => Foreclosures, Short Sales, Tax Foreclosures => Topic started by: campbellsimon on July 25, 2014, 01:18:07 pm

Title: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: campbellsimon on July 25, 2014, 01:18:07 pm
The foreclosure crisis has peaked, and now the nation, by and large, is in recovery mode. The nationís foreclosure rate has dropped significantly since its 2010 peak, and is now at levels not seen since 2008 (and as early as 2006 in some parts of the country).

With that said, there are plenty of foreclosure homes available for purchase all throughout the country. These distressed properties abound, from suburban communities to big-city metro areas, and can be had with steep discounts off their fair market value.

The trick is to understand how buying foreclosures is different from buying a traditional, non-foreclosed home.

Here are three tips for buying foreclosures and getting a great deal for your investment.

Understand the ĎAs-Isí Nature of Foreclosures

When you go to buy a traditional home, you often base your decision on inspections. If there is anything that needs to be done to the home, either systemically, cosmetically, or structurally, you can negotiate for the homeowners to have that work done before you buy.

That isnít the case with foreclosures. Most foreclosures are sold Ďas-isí, meaning whatever condition they are when you buy is the condition you get. This means that a bit of handiwork is usually required to make the home livable. This can range from simply replacing fixtures to serious electrical, plumbing, and carpentry work.

Understand that youíll probably have to perform some repairs. Even with this factored into the price, though, youíll still get a great deal when you buy.

Pay Attention to the Timeline

One thing that foreclosures and traditional homes have in common is this: the timeline matters.

In other words, how long a home has been on the market can play a big role in negotiating for a better price. This is especially true for foreclosures, since they may have already been to auction but didnít sell. In this case, they are called real estate-owned (REO) homes.

REO homes can be had for even bigger discounts because they are doing nothing for the bank but languishing on their balance sheets as unperforming assets. You can typically get homes such as these for less than you would a normal foreclosure at a foreclosure auction. You just have to be willing to negotiate with the bank.

Cash Offers Increase Your Chances of Success

Finally, when buying foreclosures, cash offers greatly increase the chances of successfully buying a foreclosure.

In many foreclosure auctions, cash is the only way to go. And even if you can pay in other ways, a bank is more likely to sell to you if you can pay in cash than if you have to finance the purchase.

Understand the preferred payment options for a foreclosure auction before you go, and make sure you have all the proper documentation in order to successfully submit a bid. Also, talk with the bank to see what terms they prefer for their foreclosures, to ensure you can make a deal with them. They are largely willing to work with prospective buyers to reach a suitable accommodation.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: albertlaw05 on September 13, 2014, 04:38:02 am
Very informative post.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: bruynjustin on September 23, 2014, 07:01:22 am
The tip of paying attention to the timeline plays a very important role and yes it will be a good option if we bargain for that property. Thanks for sharing this.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: campbellsimon on October 05, 2014, 04:31:27 pm
The thing with the timeline is that there are pros and cons to buying properties that are in each stage of the foreclosure process. Additionally, the process can be radically different during the process. The risks also vary as well.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: victor56 on November 11, 2014, 08:49:08 pm
The foreclosure crisis has peaked, and now the nation, by and large, is in recovery mode. The nationís foreclosure rate has dropped significantly since its 2010 peak, and is now at levels not seen since 2008 (and as early as 2006 in some parts of the country).

With that said, there are plenty of foreclosure homes available for purchase all throughout the country. These distressed properties abound, from suburban communities to big-city metro areas, and can be had with steep discounts off their fair market value.

The trick is to understand how buying foreclosures is different from buying a traditional, non-foreclosed home.

Here are three tips for buying foreclosures and getting a great deal for your investment.

Understand the ĎAs-Isí Nature of Foreclosures

When you go to buy a traditional home, you often base your decision on inspections. If there is anything that needs to be done to the home, either systemically, cosmetically, or structurally, you can negotiate for the homeowners to have that work done before you buy.

That isnít the case with foreclosures. Most foreclosures are sold Ďas-isí, meaning whatever condition they are when you buy is the condition you get. This means that a bit of handiwork is usually required to make the home livable. This can range from simply replacing fixtures to serious electrical, plumbing, and carpentry work.

Understand that youíll probably have to perform some repairs. Even with this factored into the price, though, youíll still get a great deal when you buy.

Pay Attention to the Timeline

One thing that foreclosures and traditional homes have in common is this: the timeline matters.

In other words, how long a home has been on the market can play a big role in negotiating for a better price. This is especially true for foreclosures, since they may have already been to auction but didnít sell. In this case, they are called real estate-owned (REO) homes.

REO homes can be had for even bigger discounts because they are doing nothing for the bank but languishing on their balance sheets as unperforming assets. You can typically get homes such as these for less than you would a normal foreclosure at a foreclosure auction. You just have to be willing to negotiate with the bank.

Cash Offers Increase Your Chances of Success

Finally, when buying foreclosures, cash offers greatly increase the chances of successfully buying a foreclosure.

In many foreclosure auctions, cash is the only way to go. And even if you can pay in other ways, a bank is more likely to sell to you if you can pay in cash than if you have to finance the purchase.

Understand the preferred payment options for a foreclosure auction before you go, and make sure you have all the proper documentation in order to successfully submit a bid. Also, talk with the bank to see what terms they prefer for their foreclosures, to ensure you can make a deal with them. They are largely willing to work with prospective buyers to reach a suitable accommodation.

When using a hard money lender, would that be considered offering using "cash" when negotiating with banks?  Or would that still be considered financing?
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: campbellsimon on November 23, 2014, 08:34:43 pm
Unless you have the money in your hand, all offers subject to receiving financing prior to closing is considered a financed deal. But, you can get around this by reducing the time needed for closing. This will make the offer viewed nearly like a cash offer.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: dannyspastics on January 11, 2016, 11:05:22 pm
Hi there.. Its a useful information..Buying Foreclosures and Distressed Properties isn't good choice but it can be a good options if you know about process of buying these properties.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: heartlandbuyshouses on April 17, 2017, 10:38:02 pm
Great Post!
Buying foreclosed home is a good option to people who are in budget because of its reasonable discounted price. :biggrin :biggrin
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: caroline on May 01, 2017, 12:27:38 am
Hi campbellsimon,

These are some useful tips for buying a foreclosed property.

In my opinion, "Understand the ĎAs-Isí Nature of Foreclosures" is the key point that needs to be keep in mind while buying a foreclosure property.

Thanks!!
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: barbaraherbert on May 03, 2017, 04:07:41 am
learned a lot. thanks!
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: marksmith on May 24, 2017, 11:58:35 am
Hi,
Great and valuable tips for buying foreclosed properties.
I think, must read for homeowners who are planning to buy foreclosure properties.
Thanks!!
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: hlpr.algorithms on January 14, 2018, 12:20:00 pm
Very helpful. Thanks for sharing.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: SPBuyersLLC on January 17, 2018, 06:12:14 pm
Thank you for sharing. Great info here. Foreclosures should start coming back around within the next few years.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: amazeproperties on February 24, 2018, 08:55:09 am
Great article.  Thanks for posting.  @SPBuyersLLC I'm assuming this too.  It will be unfortunate for those owners but us investors will be there to buy and repurpose those houses and bring the values back up.  And some may even be able to sell to us before hand, avoiding that event.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: ZitBuysHomes on April 16, 2018, 01:23:58 am
We buy a couple of foreclosures every couple of months at the trustee sales here in Austin and Williamson County.   The competition for them can come down to aggressive bidding on some of the properties.   We keep to our guns on our top level prices that we will buy for a house. 

I had approached a homeowner a couple of months ago about her property (appt of substitute trustee had been filed) she said she had it handled.  Last month, I bought the property at the trustee sale.  It was difficult to go back to her to let her know that I had bought it.  Lucky for her, we are using it for a rental and she is now renting it from us. We are seeing more and more distressed properties in the area. 
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: Better House Buyers on April 19, 2018, 07:06:45 pm
starting to see an increase in foreclosures in my area. 
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: Terri Ring on April 21, 2018, 08:36:23 pm
I have approached so many who have equity( sometimes it is a good amount)  say they have it taken care of, and months later lose their home to foreclosure. It is a sad thing to see especially when they could have walked away with cash in their pocket.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: SolutionHomBuyers on May 29, 2018, 04:33:48 pm
4 Strategies to Buy Foreclosures:

1. Approach homeowners in pre-foreclosure and make them an offer to buy.
2. Purchase the property at the public auction.
3. If no one bids on the property, it becomes bank owned.  Purchase the property from the bank.
4. Make an offer to purchase the property from the investor who bid and won at the auction.
Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: detroitcashforhomes on July 18, 2018, 04:47:43 am
Tips for buying the foreclosure:-

1. Get pre-approved for a mortgage
2. Know what you are getting in to
3. Donít assume they will just accept any offer
4. Donít limit yourself to foreclosures


Title: Re: Three Tips for Buying Foreclosures and Distressed Properties 
Post by: HUD512 on July 31, 2018, 07:51:09 pm
Even though the original post is over 4 years old, the tips about foreclosures still hold true in 2018.