Twelve Tips in Buying a Foreclosed Property

Foreclosed homes have been sweeping the housing market these days, bringing down values of properties, dislocating families and sending the government scrambling to manage this crisis. However, some homebuyers view a once-in-a-lifetime chance opportunity in the dark headlines-buying foreclosed homes at very low prices.When buying a foreclosed home, keep in mind that you are cashing in on a home someone was unable to pay for. Foreclosures are hard to locate and to execute transactions. Nonetheless, the potential to run them over for a neat profit could be there.The following are tips to consider when purchasing foreclosed property:
1. Understand that foreclosures mean that the homeowner was unable to pay his or her mortgage and the lender takes back the property, thus there are legal steps involved in the buying process and may differ in every state.
2. Check out the advantages of buying a foreclosed home. Because the bank or lender wants to recover as much of its investment fast, foreclosed homes are usually unloaded at considerable discounts, up to thirty percent or even more.
3. Look for an agent who is fully knowledgeable or has a thorough experience in foreclosures. Some home sellers will not accept offers from unrepresented homebuyers.
4. Find foreclosure listings in real estate newsletters, magazines, newspapers and online search engines. Make sure to call lenders for REP properties. Furthermore, you should check public records for other details.
5. Make it a point to tour the property and do an inspection as closely as possible. Some foreclosed homes, unlike fixer-upper homes are fairly in good shape while others could be behind in maintenance.
6. Get your real estate agent to check out nearby or comparable homes in the area to determine if the asking price for the foreclosed property is indeed a bargain.
7. Make sure to check your credit report and correct any false data out outdated information. You should also try to get prequalified for a mortgage.
8. Determine if a foreclosed property has any liens attached to it, like unpaid property taxes and find out who is liable for these fees.
9. Have the home inspected and asks the seller if he or she will allow it. Some home sellers included this as part of the agreement, but homebuyers still has to pay for it.
10. Be ready to deal with a lot of paperwork with a foreclosure than you would in a conventional home purchase, especially if a government agency is involved.
11. Determine how long the house has been left vacant. The longer the vacancy could mean the more damage to it.
12. Take a look at the landscaping carefully. If the home has been neglected, vines, untrimmed trees and bushes could contribute to its deterioration. Remember that vines could crawl into windows and seedlings of trees could send roots down to the foundation.Keep in mind that some investors who purchase foreclosed homes with the intention of doing as little as possible to it and hoping to resell for a profit may find little profit and plenty of headaches. Some cities are cracking down on neglectful property owners and charging penalties that could increase over time and unkempt homes lose their values fast.

Rental Homes Don’t Need to “Dress” Well?

Everyone knows that for a home to sell (especially in a challenging economy) it needs to look its best. Now does that logic apply to rental homes in terms of leasing them out?Not from what property managers sometimes hear from rental home owners:”It looks fine. It’s just a rental.””I’d live here with the place looking ‘as-is.’ I don’t think I’d want a prissy renter who couldn’t deal with a few minor issues and a little dirt.””The other property manager down the street said it was fine the way it was. You want me to spend how much to fix it up?”I’ve heard the analogy that a house should “dress” like it’s dating when it’s on the market for sale, and “dress” like it’s married when on the rental market. I’m not sure if I’m more bothered by:1. The connotation that spouses don’t try to look their best for each other once they are married
OR
2. That property managers have to resort to relationship analogies to get people to actually listen to themThat being said, I think there is a semblance of truth to the fact that homes for sale need to “dress” better than homes for rent.But… there is a direct cost to this! And this is when “monthly rent versus value” arguments start. Let me explain.When we are assessing what a rental house can rent for, we provide a range of rental prices (example: “Your house should rent in the “$1,100 – $1,300 a month range.”). We ask the owner to pick the price they want to rent it for. Well, duh! Everyone (except the morons) would pick the $1,300!Well, after further thought, maybe not. There are drawbacks to marketing at the highest rental price when the rental house doesn’t match up to competing homes; drawbacks like the house staying vacant for a long, long time!In order to command top rental dollar, the rental home needs to:

Have minimal flaws and look really good
Offer equal or more tangible value than similarly priced rental homesSo, if owners don’t want to spend the funds to have the house look immaculate and the house is not the same or a better value than similar rental homes, they may want to list it at a lower price (like $1,150). This will ultimately offer a better ROI as they won’t have to eat their mortgage payment and expenses for the many months it might take to rent it out (this happens when price is not correlated well with market value).Unfortunately, the market doesn’t lie. With the internet, prospective tenants can find hundreds of rental homes that are all competing to get their attention and money. The market is efficient; rental homes that offer good value will get quickly snapped up, and the ones that don’t will sit.The way a home looks is the most important criteria in how much a renter will pay each month in rent. If the home has “some minor issues and a little dirt”, there is value lost when compared to a fully functional, clean rental. The rental rate needs to be adjusted downward or the home will sit empty for months and months.The bottom line is that good-looking homes offer more value, which will command a higher rental rate, and be vacant for less time. This generates more money for the owner. The converse is equally true. So “dressing” does make a difference!Wait- it’s also true that a well-dressed person who looks their best at all times will generate more, and better-heeled, suitors…Maybe there is something to this “dressing” relationship analogy after all?