With the abundance of foreclosure activity in the U.S., the promise of buying low and selling high is alluring. There are currently 1.5 million foreclosed homes in the real estate market. The success of investors is largely dependent upon their ability to implement astute purchasing strategies. In the frenzy, it is easy t get overly excited about the possibilities. For that reason, a disciplined approach works best.
· Hold Your Line – Foreclosures often end up in bidding wars. Never be stubborn. Establish your purchasing guidelines and stay with the framework. Do not be afraid to walk away.
· Build Lender Relationships – Lenders want to sell. They dislike holding properties and incurring carrying costs. As a result, the lenders slash prices. If short sales fall through, which many do, lenders like to have known purchasers ready to move. Having strong lender relationships can lead to acquisitions outside the bidding process.
· Be Ready to Repair – Banks offer homes at reduced rates to be rid of the property. Purchasers buy in “as is” condition. Most likely there will be necessary repairs. Have your repair team ready to go.
· Inspect With Contractors – The best time to know what your repair costs will be is prior to negotiating the sale. Request an inspection with the contractors of your choice. As you purchase in “as is” condition, it is your responsibility to know how and at what cost repairs will be made.
· Retain An Attorney – Add a real estate attorney to your team. There are attorneys who specialize in foreclosure acquisitions. This is not an area to cut corners. A good real estate attorney will help make your venture profitable.
· Be Patient – Do not be in a hurry to submit your bid. The initial bidding will set the tone. If the opening bids are too high, walk away.
· Pre-arrange financing – Lenders only sell to qualified bidders. Align your financing in advance and be prepared to present letters of commitment at the time of bidding.
Follow these tips and make money in the most active foreclosure market in years.