6 Steps to Buying Pre-Foreclosure Property

Approached in the correct manner investing in preforeclosure real estate can be highly profitable. Both the buyer and the owner stand to benefit. The buyer can get the property at a considerable discount while the owner is able to cut losses substantially.

At ForeclosureRepos.com we recommend the following steps:

Step 1: Find a suitable property to invest in

Suitable real estate can be found by searching newspapers and business journals which carry notices of trustee sales and classifieds listing preforeclosure homes. Public records at the County Recorder’s Office, the internet as well as listing publications are other available options.

We recommend that together with the other options you contact an attorney dealing in foreclosures. You will then be able to clear any doubts about the process and get answers to queries.

Step 2: Narrow down the search

After the initial search is complete you will have a list of properties that interest you. You now need to evaluate these to see whether they meet your specific needs. The gross equity also needs to be calculated to assess the gross profit potential. By comparing the size of the debts the property has incurred with current market prices you will get an idea of whether you will profit from the purchase.

Step3 : Meet the Homeowner

It is now time to meet the homeowner. This will give you the opportunity to see the property and find out in detail about it. You will want to know about certain aspects if you plan to live on the property. On the other hand, if you are looking at it as an investment you will need to assess the cash flow prospects it offers.

Step 4: Evaluate and make an offer

In evaluating the real estate you will have to take into account market values, costs of fixing up the property, potential sale price and expected profits. You will also need to know the debts which the property has incurred as well as how much is still outstanding. You may be expected to clear the dues before the sale can be finalised.

Based on all the information at your disposal you can now make an offer on the property.

Step 5: Negotiate

The offer which you make should ensure that you profit from the sale and at the same time keep the homeowner satisfied. Negotiations also need to bring the lender into the picture so that low cash down payments and mutually satisfying agreements can be arrived at.

Step 6: Repair and resell

The property is now yours. You can choose to renovate it and then put it up for sale. Alternatively you can rent it out to generate an income.

Investment in preforeclosure real estate can thus create a win-win situation for all.

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