Building Inspection - Olympian is the building inspection industry leader in NY Mold Test Kits - Order the Olympian FREE professional black mold test kits
All Foreclosure Purchases Warrant an Independent Third Party Inspection
Buying foreclosed property has become a popular way to get into the real estate investing market. The current foreclosure ‘craze’ has been spurred on by the sub-prime mortgage crisis and an increasing number of foreclosed homes entering the market. However, many investors have been lead to believe that purchasing foreclosed property is a get rich quick deal, and that simply is not the case. All investments entail some degree of risk and the foreclosure market is no different. In fact one of the biggest dangers that a potential investor faces is getting property that ends up being in poor condition and costing more than it is worth. All foreclosure purchases warrant an independent third party inspection for this very reason.
Homes that are considered to be in foreclosure are bought in one of three ways:
Pre-foreclosure Sale: If you can locate a homeowner who is in danger of going into foreclosure, odds are that they want to get out of the mortgage quick, to prevent ruining their credit and losing whatever equity they have in the home. This is the best way to buy a home at a discounted price from the owner. However, it requires a good deal of footwork to find these homes, since they may or may not be on the market yet. This is the least risky way to purchase foreclosed property, as the sale will proceed as any regular real estate transaction. You will have time to hire a professional to perform a home inspection and to gather any other information that you need to make an informed decision.
Auction Sale: Buying a home at auction is the riskiest of the various ways to purchase foreclosure property, primarily because you may or may not have much information regarding the condition of the home. If a property goes into foreclosure, the bank or lender will offer it up for auction in hopes of recouping some of its money. When you purchase a home this way, "on the courthouse steps", you will receive absolutely no warranty and may have little information about the property to base your decision on. This is a case in which getting a home inspection can save you a substantial sum of money in the long run. The investment amount for an inspection is very small compared to the cost of repairing or replacing systems in a home. Many defects in houses are not necessarily visible to the untrained eye.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Need an experienced & licensed building inspector? Try this linkNew York Licensed Building Inspector -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Bank Sale: If a home goes up for auction and no one bids, the bank/lender takes the property back into possession. At this point, banks will maintain the property while attempting to sell it for the best possible price. It is a common misconception that once homes have gone into foreclosure, banks will sell them for mere pennies on the dollar. Unfortunately for buyers, this is not the case. The process of foreclosing on a mortgage is very costly to banks. In fact, the average cost – the loss that a bank takes when a home enters foreclosure is $58,000. For this reason, banks need to try to recoup some of that money by selling the home at a price that is as close to the fair market value as possible. This doesn’t mean that you cannot find a property at a decent price; only that it is unreasonable to expect the bank to ‘give it away’.
The bottom line is that there is still money to be made in the foreclosed properties market, but success requires a good deal of diligence, perseverance and hard work. As with any type of investment, it pays to do your homework. Being informed allows you to strike the best possible deal, and to pass over those homes that may not be such a good deal after all.
There are several things that you can do to protect your interests, whether you are searching for a personal residence or simply a good investment opportunity. First of all, determine if the foreclosure market is the right type of investment for you. There is a good chance that you will profit from the sale of the home eventually, but it is doubtful that you will see that money for some time. Second, if you do decide that you are able to withstand the ups and downs of the market and hold out for a favorable sale, you should closely examine any property you consider. Remember that many defects that are present in a home are not necessarily obvious to an untrained observer. If at all possible, you should get a home inspection performed.
Mold Test Kits - Order the Olympian FREE professional black mold test kits
