There is a misconception out there. Many beginning investors and homebuyers automatically think foreclosures are a good deal. Unfortunately, I’m here to tell you they rarely live up to the “hype” and they are certainly not easy.
Sellers who go into foreclosure will stop making payments for a variety of reasons. There may be medical conditions, loss of a job, divorce, job transfer, or excessive debt. Whatever the reason, they stop making payments and in many instances, the upkeep on the home as well.
For those who specialize in investments, there are many reasons why it is preferred to deal with the property before the foreclosure proceeding. Here are just a couple to start:
Negotiations. You have the opportunity to negotiate your sales price with the seller and bank. In some instances, you might even end up paying less than you would at auction since it may be less expensive for the bank to settle before going through the hassle.
Inspections. You have the opportunity to inspect the property before you purchase it. Sometimes sellers will become angry at having to leave their home and destroy the property as they go. If you buy a property sight unseen, you have no way of knowing what it is going to cost to repair or even make it habitable, let alone sellable later. For homes where the sellers walk away and shut off the power, this can be particularly difficult during the winter months. Who knows what surprises you’ll need to repair once the ice melts.
I think we can all recognize that even if you are given a “free” car, there is still a point where no matter how much money you invest to fix it, you may never see a return on your money. Think of investments the same way. Personally, I’m about making money on my investments, not wasting it away.
Avoid Evictions. Even after you receive title to the property, the owner or tenant may not want to leave and you may be forced to evict them. Unfortunately, I have had experience in property management. I will tell you first hand that evictions are costly, time consuming and no one wins in the end. On top of that, one wrong step in the paperwork and you are back to square one.
Can you handle it? The last thing to think about when buying foreclosures is are you the type of person who can take advantage of a sellers misfortune? Really, this is a serious question. Sure, it’s business, whatever. But, you still need to sleep at night and not everyone can (or wants to!) after they have put a family on the street.
If you are still considering heading out to the auction block, make sure you are well prepared.
If are interested in finding the true deals and saving yourself time and a headache, let me know. There are great deals in every market, you just have to know what to look for.
Jen Hudson, GRI (360) 652-1200 or firstname.lastname@example.org