How many of you really know the ins and outs of Real EstateForeclosures?
First off, the term Foreclosure is very broad. Meaning thatthere are several parts including ‘Pre-foreclosure’, Short Sale, Auction andBank Owned. So, the term ‘Foreclosure’ is really a process that someone goesthrough, not a Real Estate Strategy. In this article, I would like to giveyou some tips when purchasing Bank Owned (REO) properties. These are homes thatthe bank has repossessed after terminating the property rights of homeownerswho defaulted on their mortgages. The bank, now the owner of the house usuallywants a quick sale of the property, and therefore foreclosed homes are usually offeredat reduced prices.
Be aware that most banks almost always have addendumsto a sales contract that are designed to protect their own best interests. Whenyou purchase a foreclosure, it is always on an “as-is” basis.
That means that any repairs that must be done to thehome, and any outstanding liens on the property become your responsibility. Insimple terms, the bank will assert that they have no knowledge of the conditionof the property and then they will relinquish all accountability for any necessaryrepairs/liens – including the cost. What this means is that what you thoughtwas a great deal might not be.
This is where that recurring term “Due Diligence” comes in.
Hire a title company for a title search to make sure thereare no liens or HOA dues etc. This way you’ll know that the title is free andclear.
A dirty little secret about foreclosures is that theyare almost always in very poor condition. Hiring a qualified home inspector isa must because many times they will uncover extensive damage and identifycomplex repairs that need to be done to the home.
The key is to have the home inspected prior to signinga contract because once you’re under contract it is extremely difficult, if notimpossible, to ask the bank to give you money back for any restoration efforts.Once under contract all costs are yours!
What does this mean in the long run?
The fastest way to get these and all other steps right thefirst time is to attend our 2-Day Live Event. Go to www.chrisgofflive.com to learn more.
Many so-called Real Estate Mentors, Speakers and Coachesregale of the money that they make, their own fancy homes and cars that werepurchased with dealing in foreclosures and tell you how you can do the same bybuying their program.
But the one major thing that they somehow forget to fill youin on until you’re in the program is that to do Foreclosures you’ll need Moneyor access to money.
This is not a “No money down strategy like Lease Options orWholesaling” but there are ways to assign these contracts with the correctknowledge. So, if you’re not able to put down large down payments and repairsor you do not know anyone to invest in them for you, stay away and start offlike I did. Start off with some no-money down strategies until you build enoughcapital to take advantage of foreclosures.
One last tip… The most important thing to understand beforebuying a foreclosure is what you’re exit strategy. If one thing fails, whatelse can you do? Be sure to look at every angle before putting in a substantialamount of money into them.
This is where we can help.
Attend one of our Pre-foreclosure Training Events near you.Learn more at: www.chrisgofflive.com