Guide to buying foreclosure properties

There is a common wrong notion amongst many buyers and first time investors that foreclosure homes are all gold mines. Just buy them at prices way lower than the market value, change a few things and then sell at full market value; earning huge profits.

Buying foreclosures is a tricky business and not all foreclosures are a good deal. Most will not be worth buying especially if you are buying a home for yourself. If you are a homebuyer or an investor, it is better to contact the seller first. Do this before the foreclosure proceedings have a chance to complete themselves and you will have a chance to get a good deal.

But there are always complications involved with buying foreclosures. Get to know the laws that govern foreclosure sales in your location. These laws tend to be different for each location. By agreeing to buy or making a deal you might be breaking a law that you are not aware of.

In some cases you might needed to make certain financial disclosures when buying these properties, like equity purchases. Whatever the legal requirements are, make sure you meet them fully. Or else you risk facing hefty fines, lawsuits; the deal can even be nullified.

Determining the price of a foreclosure is the most important part. You need to understand that these homes are sold absolutely as they are. You absolutely must try to find out everything you possibly can about the property. Once you buy it, you will be buying in to any defect, damage or structural flaw that it might have. In such a case your money will be lost to a bad investment.

So gather as much information about the property as you possibly can. This will also make sure that you do not pay a price that is more than what the property is originally worth. Don’t automatically think that foreclosures are a great deal because most of them are sold at or close to the real market value.

If you want a really good deal, look for houses that need repairs. These are often sold at really low rates and they will be profitable even after you spend money on repairing them.

Even though the auction usually starts at the amount of payment that is to be recovered, bid can quickly go up if there are enough interested buyers. If you are a foreclosure investor, you must make sure that you know the value of the property in the actual real estate market. There are many ways to find this out and you must use them all to judge the value of the property.

Before you even make an offer, make sure you have completed all the bank formalities. Get a preapproval letter from your own lender if there is one. Make sure your own financial position is secure before you make your offer.

If you can cover all the bases properly, you will end up with a good investment by buying the right foreclosure property.