How to make sure you are making a good investment when buying foreclosed homes?

Foreclosed homes offer the investor to make a profitable investment since the property is for sale due to the inability of the owners to repay the secured loan amount. The lender then sells these houses at prices much lower than the real value, to recover their lost money.

Buying foreclosed homes is a good idea, as one can get a good property for much less money than one would spend on buying a property in the normal real estate market. Every investment has its pros and cons, and when it comes to real estate, you need to be extremely cautious and carefully look at where you are putting your money and determine the return on investment.

To make sure you’re making a sound investment, keep the following points in mind when buying foreclosed homes:

1. Thorough Search: Do a proper search for foreclosed properties on the Internet, newspapers, real estate magazines, and foreclosure listings to find several properties to choose from. Government agencies and Housing and Urban Development also announce several foreclosed homes.

2. Understand Foreclosure Laws – Laws governing foreclosure differ from state to state, so make sure you have a good understanding of current foreclosure laws as this will make your transaction easier.

3. Once you’ve chosen the property you’re interested in, ask if the seller accepts the buyer’s offer without representation or not. If you don’t agree, find an agent with good foreclosure experience to represent you.

4. Property Inspection: Carefully inspect the property to determine its condition and the amount of repairs it will incur. Good maintenance of the property will be an important factor in determining the price you are willing to pay.

5. Negotiate the price: Remember that this is a foreclosed property you are planning to buy, and the lender is eager to repair the loss. This gives you the bargaining power. Find out about the going rates for similar properties and negotiate the price accordingly.

6. Also find out about unpaid liens or property taxes and who will pay them, before you buy the property.

7. Check the documents – Once the deal is finalized, carefully check the documents to make sure you get a clear title, possession of the property, and that the property is clear of all liens. Consulting an attorney will simplify the process and ensure that all legal formalities are met.