The market is ripe for foreclosed homes. With economic recovery not as fast as hoped for, there is still time to make the best of the immensely popular trend of buying foreclosed homes in recent times. You see people on TV every day, saying they buy foreclosures and flip them, making a lot of money and its easy to wonder if buying into this market is the right thing for you too.
Foreclosed homes can be a very good and much more affordable way of buying a home. However, you need to know more about the different types of foreclosures, before you can decide which is right for a first time homebuyer. Delve into the details a little to see what suits you, especially paying attention to the cons, the negatives of this business. Pre-Foreclosures can be difficult to find, but the final rewards of owning a home are quite great.
A home may be in pre-foreclosure, or about to be foreclosed, for reasons varying from, divorce or death, to loss of a job or a disability. Most people with houses at this stage want to save their credit ratings by selling the home fast, for a surprisingly low price. Buy a list of homes in this stage of proceedings and send out letters showing an interest in buying. Try to work out a deal good for both parties. Alternatively, you can buy foreclosure properties at auctions on the courthouse steps, but you would have to compete with professional real estate investors.
The main disadvantage of buying this type of home is that it often needs a fair amount of work done on it before you can move in or even think about flipping the house. the homeowners obviously have some financial difficulty, so chances are that maintenance and upkeep of the house has suffered too. In most cases, the homes need some repairs, ranging from a new layer of paint and some carpets to extensive rebuilding work before you can turn them into an attractive residence or a feasible resalable investment property.
REO homes, already foreclosed homes that did not sell at auction, are listed with realtors. These are great investment for beginning real estate investors or first time homebuyers if you prefer not to invest a lot of time and money in extensive repairs. These properties sell at an average of five to ten percent below the retail rates, and make excellent first time investments or family homes. Get a home inspection before you make an offer to lower your risks of spending on a badly run-down property.
Buying foreclosures can be a gold mine or a total disaster and, like any new field, it can be rather scary to think of getting into this market. Find out what you can expect, do a little due diligence and you can find a great house that is really a great bargain.