Buying Distressed Properties By Elyse Umlauf-Garneau
Every cloud has a silver lining and the rise in California home foreclosures in no exception. That's if you're an investor hunting for good deals.
Investing in foreclosures is no low-risk venture. You often need to act quickly, have ready cash to buy and may need to earmark money for repairs to make properties sellable.
Here are some basics on buying distressed homes.
Identify properties: Right now, choices are abundant. For instance, in mid-July, a search at foreclosure.com for foreclosure properties in San Diego County yielded 28,301 hits. One way to locate homes is to register with foreclosure information services, such as www.foreclosure.com and www.realtytrac.com
Options to buy include:
Short sales: When borrowers can't keep current with mortgage payments, some lenders agree to allow the sale of the property for less than the loan balance. Frequently, you can find such deals through real estate professionals representing troubled homeowners.
Auctions: Auctions typically offer the best buys but the risk to you is greater. You must research liens against the property and decide on your maximum bid price. You're also required to have cash on hand; remember, you're bidding on homes you haven't inspected and competition can be stiff.
REOs: These are properties that have been taken back by banks. You can contact bank's REO or asset management departments to locate properties. Such homes are frequently listed in the multiple listing services, so Realtors (R) can assist you with purchases. Unlike at auctions, you'll be able to inspect properties and banks may have made repairs to a home.
Before You Leap
Take seminars, visit Web sites and read books before investing. Do proper research. Check neighborhood comparable prices so you don't overpay.
You're inheriting previous owner's problems, so investigate other costs, such as liens and unpaid taxes that you could be responsible for.
Consult appropiate experts, such as lawyers, certified public accountants and real estate professionals. REALTORS (R) can often locate and execute short sales, find REO's and help you evaluate market conditions.
Elyse Umlauf-Garneau is a freelance real estate writer.
source: Reprint from California Real Estate Official Magazine of The California Association of Realtors(R) September 2007