• By: ANITA KOPPENS

  3360

  
  Real estate is traditionally a popular investment, and buying foreclosures can be an profitable way to invest in property. Buying foreclosures requires some knowledge and competence, but once you gain information and conviction in the process, it can be a good way to construct an investment property portfolio or buy a new home. In fact, buying a foreclosure can be a great way of buying a moderately priced family home, because during a recession it may be likely that a larger, more expensive home will go into foreclosure and become available at a reduced price.

  When possible, include a knowledgeable realtor in the process. Some agents may have the expertise and certifications that allow the process to go smoothly. Their familiarity may help you attain properties that would otherwise be beyond your reach. One example is a HUD home. Foreclosed properties are very desirable to many people because of the potential for savings, so finding a qualified real estate agent could make a substantial difference in your ability to buy these properties. Realtors also have access to the latest listings, so they will be able to offer the most up-to-date possibilities as they hit the market.

  Assessing the risks of buying a foreclosed property are important. Buyers must be conscious of taxes and liens. If you're buying from a bank, there is little risk because the bank will have taken all liens and taxes into account before offering the property. A bank owned home will also be unoccupied which means that you will not have deal with any type of eviction process. Also, you may be able to secure a mortgage on the home with better than usual terms because of the nature of the deal.

  There are some alternatives to buying from a lender, of course, but the risk involved tends to increase as the potential pay-off does. The question is whether or not you're willing to assume the risk in order to reap a greater reward. Alternatives include buying at auction, buying real estate-owned property, and buying a pre-foreclosure. Buying a pre-foreclosure has the most potential for making a really great deal, but it usually involves dealing directly with the owner of the property. The object is to offer a price for the home that is less than market value, but which allows the owner to pay what they owe on their mortgage. This can make for a sticky situation as you're offering to buy a property which hasn't been listed for sale, but it's ideal for a buyer as you'll have little or no competition.

  Once you have settled on an amount to offer, discuss it with your agent. Your agent will then present the offer to the owner, whether it is the distressed property owner or the bank. Or, the agent may help you place an auction bid, depending on what type of property you have chosen. In many cases you will be looking at a REO property, so you will make an offer to the bank. If your offer is accepted, you need to close quickly. You do not want a better proposition to come across the table and cause you to lose your property. Once you have closed, the property is yours, and chances are that you got a great deal on your new home!

  Foreclosures may be a gamble, but these communities offer great deals without the foreclosure process: Sierra Montana Homes for Sale or Skyline Ranch Homes for Sale

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