Should I consider foreclosure properties to purchase?
Question:
Answer:
Sure. Foreclosures are sometimes a great value. However, be sure to do your homework on each property. Foreclosures are usually sold subject to encumbrances such as back taxes. Sometimes these amounts may exceed the value of the property! This is the main reason most banks just end up buying these things back. To be clear I am talking about foreclosure auctions usually conducted by a sheriff or court appointed trustee. There are many stages in a foreclosure process.
If you are planning on living there and just are looking for a cheaper house that you can fix back up then consider a HUD home. They have already been foreclosed and are being sold. If you will live there you will not need to bid as high as an investor as the whole point of HUD is to offer affordable housing not cheap investments.
The only problem you might have is the financing for some types of loans. For example an FHA loan would never work as there are so many requirements that wont be met in a HUD home.
Just make sure you don't get in over your head with the fixups. Some of them can get pretty bad. (Think Meth lab). You will want to pay for a home inspection to make sure you don't buy something that is not easily fix-able (think bad foundation). And the police will help you out to know if the house was ever a drug house.
Bottom line it is a good way to get into a house if you have skills to fix it up. Make sure you have the money to buy the stuff you will need, or the means to finance it.
The process for bidding on a HUD home is easy, and agent can do it, althoguh some don't want to. There are only a few numbers required (SSN, sale price, sales commission) until you win a bid, then you gotta fill out all the paperwork.
They work well for an investor if you find the one that plays to your strong points of what you can fix up. I got a screamin deal on one.
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