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| Keller Williams® Realty of Highlands Realty 2359 US 27 South, Sebring, Florida 33870 Cat Murphy Realtor® 863-214-1622 Office 1.877.386.4343 Toll Free Office 1.866.814.4836 Toll Free Fax E-Mail RealEstateCat@Earthlink.net Web: www.RealEstateCatInfo.com |
Purchasing directly from the bank is the most popular way to buy foreclosures. It's
fairly easy, and less of a headache than other investing methods because it involves
less complications and risks.
Locate bank or government owned properties in the newspapers or by researching
them at the county courthouse. You can also contact a realtor, or use a good listing
service. We believe we offer the best foreclosure service on the market. Decide for
yourself. Visit us at www.Foreclosure.Net Find properties that meet your investing
criteria, those that are in your area, price range, size and style. Determine whether you
are buying to resell or to secure a residence for yourself. Determine if the property is a
bargain by deducting the lender's asking price from the average market price of very
similar properties in the immediate area.
Your goal as an investor is to realize a tidy profit. You can buy property at a 15%-20%
discount and earn a 35%-40% return. As a home buyer, you want to buy below market
value with a low down payment, low interest rate and reduced closing costs.
Contact the lender or the broker and meet him at the property so you can inspect it.
Record any damages and deduct the repair estimates from your price. Use a good
property inspection checklist.
Investors must deduct all expenses associated with buying, repairing, borrowing,
holding and closing again, from the price they think they can get.
Home buyers should negotiate around the four discount factors: price, down payment,
interest rate and closing costs. The bank, being a lender, can negotiate all these items.
If you still like the numbers and the property, proceed with a written offer containing
the following:
A statement indicating your intent to purchase the real estate.
- The physical address of the property.
- The legal description of the property.
- Your price.
- Your down payment terms.
- Your financing terms.
- Your desired closing date.
- Any contingencies.
- Your deposit information.
- Your name, address and phone number.
Depending on the property and several other variables, you may want to buy a
property at 15%-25% below market value. Start your offers accordingly.
Unrealistic offers will be rejected quickly. Learn to work with the banks. You can
negotiate around interest rates, price, down payment, whatever, just stay within
reasonable boundaries if you want to succeed.
Some lenders sell thousands of REO's every year. Many sell their properties at or near
market price. We know one lender who has sold almost 10,000 properties in the last 3
years, with average sales of 99% of market value.
Not all lenders behave the same way. Try to locate those that are more flexible in their
property disposition policies.
When the bank accepts your offer, close as quickly as possible. Avoid delays and
complications from competitive offers.
Advantages
The advantages to this buying method are many. There are no liens or judgments to
contend with, no homeowners or tenants to evict, no back taxes due, and accessing the
property for evaluation or inspections is easy.
The fact that the property has officially changed hands means that all that work has
been done by the lender. With all the legal work done, the complications of buying and
the associated risks are removed.
Lower down payments, better interest rates, reduced closing costs and a discount off
the market value of the property, taken all together, make for a better than average
home purchase.
While you may not be able to steal a property from the bank, a properly structured
deal will make you the envy of the neighborhood because you will have a low down
payment, low monthly payments, and a low total price. For those looking to save
money buying their first home, this is usually the way to go.
Disadvantages
In this industry the rewards follow the risks. Therefore, the payoff from this investing
method is typically lower than that of buying pre-foreclosures or buying at the auction.
An REO investor should have no problems achieving 10%-20% discount from the
market value of comparable properties. Savings of 25%-35% are harder to find. Savings
of 40%-60% are possible, but getting rarer.
Other disadvantages include: the lender that moves at a snail's pace; a lender selling
the property "as is," with no cooperation in making reparations or allowances; and the
very rare, but always possible problem of evicting a tenant or homeowner
INVESTING FORECLOSURE OVERVIEW
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