How to Buy Foreclosure Properties in Auction
By Sadiya Anjum
Investing in foreclosure properties can be extremely profitable if you have the knack of spotting the ‘real thing’ and know how to close in on the deal. Its definitely not rocket science but poor research and/ or rash moves can land you with an unsuccessful deal. Foreclosure properties can be purchased for your own residential purpose but most often these properties are for investors looking to make some good money.
Foreclosure properties offer the greatest advantage of low purchase price which can easily be up to 40% below the market value of the property. Even if you have to spend some money to renovate, a decent profit can be expected when you choose to resell. However there is always a certain amount of risk involved with buying foreclosure properties especially if the property is put up ‘as is’ (in its original condition).
Finding Foreclosure Properties
Running off to the first auction you read about in the newspaper is obviously not a smart idea. You need to do some research to find the various foreclosure properties available. To do this, you can simply access foreclosure listings available online, by going to the local court house or checking newspapers. Listings are obviously not detailed but will give you an idea of the kind of properties available which will help you decide whether you would like to purchase it. Another way of finding a foreclosure property is when you hear about a great offer somewhere.
Research and More Research
When you target on a particular property, your first move is to collect as much information as possible. Determining the market value of the property is extremely important so you can judge how profitable the investment will be. It will also help you settle on your bid. Make sure you take into account a certain amount or percentage for any renovations and other costs that may come your way. An independent research must be carried out to check out the condition of the property, title history and the loans taken out.
Visit the property and if it is not possible to inspect the property, at least you can do some hands-on research about the area. Since location is a prime factor in Real Estate, a good location will safeguard your investment to a large extent. Research the neighborhood thoroughly – access to schools, hospitals, malls, department stores, public transportation etc. If you resell the property, think about the section of people who are most likely to buy it and if the amenities they require are available in that area. Gear yourself with as much information as possible before the auction.
Know your bid limit; no matter how heated the auction may get, do not cross the limit. It will be foolish to pay more for a property and land yourself with an unsuccessful deal. Be prepared with money required for a deposit. Most often a deposit is taken in cash or check and it is best if you have the money arranged.
As far as the auction itself goes, there may be several skilled players in the field. It takes some skill on your part to ride over their bids and win an auction. Remember that you may not win the first auction you go to but it is only through experience that you will become an expert. Notice which kind of people bid and how they do it. Learning simple things can help you later. For instance, if a lender bids on a property then it is likely that the property is in good condition and clear of any discrepancies in its title history.
Investing in foreclosure properties can be extremely profitable if you approach the whole affair professionally and smartly. It is not just winning an auction that takes skill, even knowing which properties to invest in requires some knack. Doing your homework is the best way to get started on this profitable venture.
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