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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.

The First Steps Everyone Should Take Before Investing In Real Estate

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While it is quite common for everyone to seek some form of financial security through real estate, making wise investment decisions can often prove more difficult than they may realize. One of the first mistakes that people often make is not realizing that buying real estate is not the same as buying a retail product. One must have a systematic approach and recognize that much more is involved than finding the property you want and writing out a check.

Once you understand that purchasing real estate is more about the process than it is about the sale itself you’re well on your way to making good investment decisions. When you recognize the different stages of buying investment property the entire experience will become far more manageable than one might realize.

Step One – The Realtor

One of the biggest decisions you’ll have to make is to choose a good realtor. This should not be made casually as you will need to rely on that individual’s professional knowledge and expertise to lead you in the right direction. When you consider the weight of the choices you make in the different aspects of real estate investments you need to be absolutely sure that the guidance you get from your realtor will not lead you in a way that could cause you problems in the future. Unlike other investment options, real estate investments require a commitment that will take many years to satisfy. A good realtor could be your best ally or your worst nightmare so the choice you make will be one that you’ll have to live with for a long time.

Step Two – Prequalify for Your Loan

While some people will start their real estate search by looking at different homes before they begin the loan process there is good reason to get a prequalification from your financial institution. Even though this step is not a requirement many well-established and experienced realtors do expect it. One of the reasons for this is because it gives them the opportunity to identify you well ahead of an in person meeting and it also sets a price range that will help you to narrow down your search for your new property.

Prequalification is not the same as actually applying for a home loan; it takes only moments and can be done over the telephone if need be. If you have chosen a good realtor then they will be able to refer you to some of the more trustworthy lenders in the area. However, if you choose not to prequalify for a loan it is quite likely that you may be limiting yourself from some ideal properties that may be available.

Step Three – Decide on Your Needs and Wants

Your next step is to list your specific needs and wants in your new home. This step will be much easier if you’ve already prequalified for your loan. At this stage you can confidently determine the location you want to live in, space requirements, and any amenities you will want. You’ll know what price range you can reasonably expect to start your search in and just how much of your dream home you may realistically be able to find within your set parameters. Taking this step will certainly help you to avoid disappointments on the road to home-ownership by keeping you within the acceptable limits in the entire process.

Step Four – Start Viewing Properties

If you’ve carefully made the previous three steps then the fun will start with step four. Actually going to different homes and walking through is the point that every home shopper looks forward to. It is at this point that you get the tactical experience that most people enjoy when they start to look at properties. From this step you’ll measure each home you look at against your list of expectations.

It is at this stage that you’ll discuss with your realtor the different parameters of the market in the particular area. Make sure that you ask about the average list price for similar properties in the same area, and how many days a home will stay on the market before it is sold. Your realtor should be able to provide you with all of the information you’ll need so that you can choose the right property to pursue.

There are many different steps that a future homeowner must make in order to find the ideal property for their investment. In addition to these four steps a potential owner will have to pursue financing, have inspections made and even more. Still, with the right professionals at your side to walk you through the entire process there is no reason why making a successful real estate purchase can’t be accomplished successfully.

How Technology Has Brought In A New Age Of Real Estate Investing

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Whether you’re buying a piece of property or you’re selling you’re probably thinking about the recent struggles that the real estate industry has faced in the last few years. With a bout of foreclosures, an ongoing recession, and a sudden downturn it is easy to understand why many may be facing their decisions with more than a little trepidation.

Still, there has been real evidence that the real estate market can and has proven to be profitable for both buyer and seller in many ways. One of the reasons for this is the new way to find, select, and purchase property. With the many different technological advancements now available, investing in real estate can be very rewarding.

Using Mobile Devices

Today, rather than looking at newspaper ads and real estate books people are now turning to their mobile devices to get needed information. People are using smartphones, tablets, and other portable devices to collect data needed in real time. Those who are buying properties can quickly gain access to homes for sale as soon as they hit the market and those selling properties can quickly collaborate and negotiate deals quickly and easily.

With apps readily available, contracts, bids, and other important documents can be transferred from person to person instantly allowing for deals to be made with increased efficiency. And now with the ability for E-signatures to be applied to any document deals can be made and sealed without having to deal with the logistics that were most common in the past.

Easier Search

In the past, searching for the right property was often the biggest challenge for home buyers. Searching the web and sifting the many real estate listings could be a time consuming venture. However, with the new technology available a potential home buyer can sift through the thousands of listings and narrow down the list based on their own specific parameters, speeding up the search for new homes exponentially.

Making your property search mobile has made finding the right location to invest in much more efficient than ever before. Rather than having to sift through tons of information and waiting for documentation to be delivered, reviewed, signed, and resent, decisions can be made at a moments notice. The information you receive from these mobile devices can be filtered based on a number of parameters that you the investor suggest; it could be your geographic location, price range, or even the individual qualifications of an expected agent.

In addition to all of this the information you glean can be delivered and communicated within seconds making it possible to find that right real estate investment property in record time.

The Virtual Tour

One new feature that technology has done for those who are looking to buy real estate is to provide the virtual tour. This feature is a means for a potential buyer to view a piece of property without having to be on site until they are ready to seriously consider its potential. It also helps agents and realtors to show a particular property to more potential buyers without expending the added effort to navigate the different logistics to get all parties together at any given time.

Accessibility

The fact of the matter is that most people already have access to this new technology. The challenge that they now face is learning how to take these advantages and use them to the best of their ability. With the ability to finalize transactions without a face-to-face interaction more deals can be completed much more efficiently.

The world of real estate has changed drastically over the years. The times of pouring through newspaper advertisements and searching the real estate listings to find the right property are gradually fading into the past. With modern technology at your fingertips finding the right piece of property to invest in is easier than ever. You will be able to save not only time and energy but by extension save money too in your quest to find the perfect home investment.

Today’s real estate industry has changed drastically over the years; with the nation recovering from the real estate crisis of the past consumers are now becoming much more wary of their investment decisions. They want to find, negotiate, and seal the deal with fewer hassles and pay less commissions at the same time. This means that a realtor will have to deliver on their promises much more thoroughly than ever before and with far less time to do it in. This could be next to impossible if it weren’t for the advancements of modern technology over the years to make the job that much easier.

Recognizing The Differences In A Foreclosure And A Short Sale In Real Estate

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While many people may fully understand foreclose properties, the term “short sale” may catch them off guard. The fact is that both of these real estate investment opportunities can be the key to helping an individual get into the home of their dreams. Each comes with its own set of advantages and disadvantages that each investor must understand before they pursue their opportunities in order for their venture into real estate will pay off.

Aside from the fact that the lending institution initiates foreclosures after the property has been repossessed and the homeowner often initiates short sales there are some distinct qualities of each type of sale that a buyer must beware of. Both types of transactions can be made at below market rates but caution must be exercised for a number of reasons before you begin the process.

Often short sales are initiated when the homeowner finds that he is no longer able to maintain the mortgage payments and have fallen behind. If something is not done to bring the loan back into good standing the homeowner may be facing foreclosure in his future. This could damage his financial credit and his future in his home. For that reason many choose to exit their property through a short sale where they can resell the property at a lower price than they owe on it.

What a Buyer Should Know Before Buying a Foreclosure or Short Sale

Because these types of investments can prove to be both beneficial and detrimental there are some very specific steps that each investor should take into careful consideration. It is extremely important that you deal with a realtor that specializes in these types of investments. They will be able to guide you through all the steps needed to complete the deal and warn you of any potential pitfalls that may be coming your way.

Always consider the condition of the property. If you’re expecting to fix up a piece of real estate then you need to be aware of the fact that foreclosures will often come with an “as is” tag and there may be many hidden problems that you will not readily be able to see with the naked eye. Short sale properties are usually in a much better condition but may not be able to bring the lower price tag that comes with them.

What You Must Remember

Regardless of the professionals that you enlist to aid you through your investment decisions it is extremely important that you do some of the research and legwork yourself. Always remember the warning, ‘let the buyer beware’ when dealing with purchasing used property. Investing in real estate is most likely going to be one of the most expensive ventures that you will have throughout your life.

In addition to understanding market prices you’ll also need to find out as much as you can about the condition of the property and any possible liens and back taxes that may be owed. When you’re ready to invest in real estate of this type it pays to take the approach slowly and methodically making sure that every detail is completed thoroughly at each phase of the sale. If you can manage each step carefully, there is no reason why you won’t be able to find your dream home at an extremely affordable price.

The Difference Between Buying A New Home And A Foreclosed Home

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Many people are of the belief that the best real estate investment lies in foreclosures. While there is no question that one can find some exceptional deals in foreclosures this does not necessarily mean that buying a new home cannot offer some of the same if not better deals. There are pros and cons for each argument and it would be well worth your while as an investor to understand both sides.

Buying a New Home

The obvious caveat of buying a new home comes with the warranty protection that you will get. New homes have this added protection in the event that something goes wrong with the building that is a result of inferior materials or poor construction workmanship. New homeowners have the luxury of knowing that they will not be responsible for out of pocket repair costs if something were to happen.

Those who choose to buy new homes also have the advantage of better financing options. Some incentives set in place can save you thousands of dollars off the total cost of buying the property making it that much easier to secure adequate financing for the home of your choice.

Finally, when purchasing a new home you can often work directly with the builders to get the home you really want. If you begin the deal early enough you could customize certain features of the home; choosing the right cabinets, floors, and space design well before the home is completed. This means that you can end up with a home that will reflect your personal tastes and personality.

Buying a Foreclosed Home

By contrast purchasing a foreclosed home may get you lower prices overall but you also have to make some sacrifices in the process. There are a number of risks and challenges that come with purchasing these types of property. For the most part these homes come “as is” leaving you with no warranty or protection if something goes wrong.

In many states by law, any home set for resale is required to come with a “full disclosure” clause that should clearly point out any particular problems that the property must have. However, with foreclosures this is not the case so the buyer leaves himself vulnerable to any number of difficulties and challenges that may come along. If something were to happen the buyer has no possible recourse if problems are found later on.

Finally, there are always the many financing challenges that may come up. While you may have the luxury of securing financing after you’ve found the home of your choice, it is strongly recommended by many realtors that you secure your financing well-before you begin your search for the foreclosed property. At the very least this phase must be completed before you begin the bidding process.

There is no way to tell anyone which real estate investment option is the right one for you. Your decision will depend on your personal expectations and circumstances. However, understanding the common misconceptions that come with investing in real estate is a major step that everyone should take to make the transition to home ownership much more attainable.