Buying The Right Kind Of Foreclosure Home

The market for foreclosed homes has become immensely popular in recent times. You see people on TV, buying foreclosures and flipping homes and sometimes you might wonder if buying into the foreclosures market is right for you. A lot of people are now trying to get into this business because foreclosed homes are seen as a very good and affordable way of buying homes. Those who have not tried it may want to at least take a look. However, you need to know the different types of foreclosures and which ones would be right for the beginner and the first time investor.

In order to find the correct information, you must delve into it a little and see if it suits you. It is not as if there are no cons, no negatives, in the business. Like everything else in life, there are disadvantages you must look at. Most people, however, agree that the advantages in the foreclosure homes market outweigh the disadvantages. Pre-foreclosures are not really easy to find, but the ultimate rewards can be great. A pre-foreclosure is a home that is in the beginning of the foreclosure process or about to be foreclosed on.

There may be many reasons for foreclosure, like divorce or death in the family, the loss of a job or the sudden inability to go to work or any one of many such hardships. Most people in a pre-foreclosure want to save credit ratings and are willing to sell their homes fast and cheap. You can simply buy a list of homes in pre-foreclosure stage and then send out letters stating your interest in buying the home. Remember that these people are desperate to sell their homes and hopefully get something out of the deal. They are about to lose their homes and have to move, so do not take advantage of these people. Try your best to work out a deal that is good for both parties. Foreclosure properties can be bought at courthouse step auctions as well. But these are extremely difficult and best left to the professional real estate investors. Although an investor can often make substantial amounts of money with courthouse step auction foreclosures, the risks are equally high and it is not recommended for beginner foreclosure investors.

The main disadvantage of foreclosed or foreclosure-homes, is that they may need a fair amount of work done on them, before you can move in or flip the house. People who are in financial difficulty usually own foreclosed houses. This usually means that maintenance and upkeep might have suffered as well. Foreclosure homes generally need some repairs, a layer of new paint and some new carpets at the very least, to turn them into inhabitable and attractive residences or resalable investment properties. REO homes are great for beginning real estate investors and first time homebuyers who do not wish to invest a lot of time and money in repairs.

An REO is a home one that has already been foreclosed. The home did not sell at the courthouse step auction, so the lender asked a realtor to sell the home. These homes are then sold at five to ten percent below retail and make excellent first time real estate investments or homes. Getting a home inspection before making an offer will lower the risks of landing a really badly run down property.
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