A Realistic View Of The Challenges Involved In Buying Foreclosed Property

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Investing in real estate foreclosures can be just as difficult and sometimes more challenging than investing in other types of real estate. Often people make assumptions about foreclosures that can make the entire process much more difficult. There are many myths that people have been lead to believe that have caused many problems as you proceed down the path to homeownership. Understanding these myths and the problems they can create can simplify the entire process.

Financing

Since the majority of those looking for real estate are expecting to finance their investment it is important that you each reach a full understanding of the process before they begin. Most buyers believe that they should first find the property of their choice and then find an institution to finance it. However, according to some experts finding the best deals on loans will require you to secure the loan prior to searching for a home. Once you’ve found the property of choice you may not have the luxury of shopping around for the financing afterwards. The risk of losing the property while you search can become very real and you may end up losing out in the end.

Pricing

It is not always a guarantee that the price of a foreclosure is the best price on the market. Just as with any other type of real estate investment it is important that you take the time to compare the prices to other similar properties in the same location. There are times when the prices can be listed considerably lower than those of similar value, there are also times when the price can be considerably higher as well. You will have to view and bid on the property in the same way that you would any other real estate on the market.

Condition

Most foreclosed homes are sold “as is.” In a normal purchase you could reasonably expect to negotiate the price based on the repairs needed or the cost of pulling the property into a livable condition. However, with foreclosed properties this option is usually off the table. As a matter of fact, most foreclosed properties are already listed as low as the bank may be willing to go. While you may have a bit of leeway in negotiating the final price it would be in your best interest to understand that the pricing won’t change that much because of poor housing conditions.

Finally, you’ll want to consider the timing that may be involved with buying a foreclosed home. Because many of these homes are already priced well below current market value you can fully expect that they may not be on the market for a long period of time. Many of them could sell within days or even hours of the time they are listed. Being prepared to move when the opportunity arises will help you to get the right property when you find it.

Understanding that while foreclosures can prove to be an excellent opportunity for those looking to invest in it is also extremely important that you realize the unique challenges that may come with this type of property. It may seem difficult and at times be overwhelming there are many rewards when you choose to invest in a foreclosed piece of property. Keeping a realistic view of the challenges you face before you begin can help to take some of the edge off of the stress that may be involved.

Watch Out For The Emotional Side Of a Short Sale

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Understand the Emotions that Come with a Short Sale

Homes are sold under a short sale when a homeowner can no longer pay the mortgage for the property, but it is still in good enough condition to be sold to the lender.  They way, the homeowner can get a majority of their money back right away.

When someone has to sell their home as a short sale, the money that isn’t recovered from the sale of the home has to be repaid by the homeowner over time. The amount that they have to pay each month will be significantly less than their mortgage payment. This tends to be a better financial option for them in the end.

Selling a house as a short sale can come with emotional turmoil. If you have recently learned that you can sell your house as a short sale, you need to be prepared for the emotional roller coaster that will be coming in the near future.

Face the Fear

Selling a home as a short sale can be very scary. You want to be sure that the house sells for as much as it possibly can so that you have to pay as little to the mortgage company as possible.

Many people become scared during the initial stages of a short sale because so many things are left up in the air. You don’t know when the house will sell, how much it will sell for or how much you are going to have to pay.

It’s Okay To Feel Some Depression

When selling yourself as a short sale, it’s common to feel sadness and sometimes become very depressed. There are often many memories attached to a home and feeling like you have no other option but to sell it can leave you feeling very sad.

You don’t want to leave behind your treasured memories, but you also know you don’t want to be in financial ruins and selling the home short sale is the best option for you at that time.

Self-Loathing

Many people begin to experience self-loathing when they have to sell their home as a short sale. They feel like they didn’t make the right choices and start to become angry at themselves for not making changes when they could have made them. It’s important to cut yourself some slack and realize that everyone goes through hard financial times, eventually and that how you handle the situation is really wants important.

Residual Anger

Anger is often an emotion tied to short sales.  Homeowners get angry at the fact that they can’t stay in their home.

They feel like there should be other avenues available to them. Sometimes feel like they were led to having to sell their home. Being angry about the situation can cause you to be closed minded and not take the necessary steps to be able to sell the house.

You want to sell it quickly so that it doesn’t go into foreclosure because they can create an even more difficult situation for you.

On the Other Side – Relief

Once someone decides that they want to buy the house and the buyer and mortgage holder agree to a set price it will give you relief.

You’ll finally know how much is left for you to pay for the home and be able to start planning for your future. You will be able to know what your true finial situation is. You also won’t have to worry about the house possibly going into foreclosure.

Excitement

Eventually, you will more than likely reach the point of being excited about the short sale. You no longer have to struggle to try to pay the mortgage each month. You’ll be able to start your life over again and rebuild your finances to get yourself into a better place.

It will take time but eventually, you may be able to get yourself to the point of being financially independent. You’ll be able to use the short sale as a life lesson that you can grow from and avoid in the future.

A short sale can seem like the end of the world at first. It’s important to realize that everyone goes through hard financial times and being able to live and learn from the experience can make you stronger in the end.

You don’t have to let the short sale define you. Over time, your credit score will improve the short sale won’t even matter when you buy your next home.