Common sense and sound judgment make the most of foreclosures
The mouthwatering prospect of reaping a huge profit on any investment sometimes makes people do crazy things – like buying a foreclosed home at a bargain price without ever seeing it or knowing anything about the owner or tenant.
If you decide to move into this lucrative investment market it’s as well to remember that the person who currently owns the home (or previously owned it if it has been taken by the bank) probably isn’t very happy. Most foreclosures arise out of divorce or business failure....or in today's world, failure to make payments that have increased due to the type of mortgage origianlly applied for.
While some accept the loss of their home, through their own default on payments, with dignity, others go crazy and may damage the house out of a sense of revenge against ‘the system’ and remove or sell kitchen and bathroom fitments. At the very least, owners about to be displaced are unlikely to carry out any repairs if or when things go wrong.
Sometimes, it is not feasible to inspect the home if the sale is proceeding outside of the judicial system. Why should the owner or, better yet, a renter who you may have to evict, let you in to look around?
In these circumstances you can protect yourself with a few common sense measures.
First, get to know current market values in the neighborhood so you can judge how much ‘profit’ you will have available to spend on repairs and can therefore develop a bid target in your mind.
Second, take a look at the outside of the house itself. How is the paintwork? Has the lawn been mowed?
And third, make it your business to know as much as you can about the nature of the foreclosure and the relationship between the borrower and the lender. And have they paid their property taxes?
It’ll be too late to find out the awful truth after you’ve handed over your own check.
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