HELP! I am looking to purchase a distressed property!
Distressed properties are homes that have either gone through foreclosure or are being marketed as "short sales." In a short sale, the homeowner can't afford to maintain the mortgage, but the lender - rather than foreclosing - agrees to the sale of the property for less than the balance of the loan.
There are advantages and disadvantages to buying distressed properties. Let’s examine distressed properties before you decide that this is the option for you.
Lenders are extremely interested in getting distressed homes sold and off the liability side of their balance sheets. Many foreclosed properties can be purchased for only a percentage of what they would have commanded five years ago. When looking into purchasing distressed properties, you'll be dealing with a highly motivated seller – either a bank in the case of a foreclosure, or in a short sale, sellers who are in financial trouble and very interested in getting out of a mortgage they can no longer afford.
It would be wise to use a professional realtor to identify great foreclosure deals for you. You may be successful at searching the web on your own, but keep in mind some of the information is outdated, some may be incorrect, and some of the available properties are not even listed. A realtor subscribes to updated listings and can offer you the most current information available. If you search yourself for distressed properties and purchase from the selling agent, you are paying a commission to someone with a vested interest. Obtain objectivity in the sale by working with your own realtor. You won’t pay any more. Technically, everyone works for the seller, since they pay the commission. Foreclosure properties are potentially the most profitable, but require the most attention to detail. A realtor experienced in foreclosure deals is highly desirable because the paperwork must be in order to submit a proper bid, and timeliness is critical.
Another great piece of advice: The title you receive after purchasing a distressed or foreclosed property is a special warranty deed rather than a general warranty deed. Some buyers are alarmed by this, but there is no need to worry. The purchase of title insurance protects the buyer. Each lender purchases insurance to protect the loan as well. Titling insurance should be obtained by the property purchaser. It is always offered by the closing agent. Consider using an attorney instead of a titling company as your closing agent. An attorney is only $50-75 more than a titling company. A real estate attorney can remedy any situation that may arise. Therefore, they are more efficient representatives on time sensitive foreclosure properties.
All of these things should greatly be taken into consideration BEFORE you purchase a distressed property or foreclosure. If you are still unsure and want to find out more, visit my website www.cashinonforeclosures.com or call 866-758-3555 to attend the next FREE Training Seminar to uncover the truth about becoming successful in real estate investing and get on the path to your financial freedom.
