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By Elaine
Voncannon
1. Search on the world wide web for distressed or foreclosed properties as a
starting point. Use a professional REALTOR to identify great foreclosure
deals for you. You may be successful at searching the web on your own, but
keep in mind some of the information is outdated, some may be incorrect, and
some of the available properties are not even listed. A REALTOR subscribes to
updated MLS listings and can offer you the most current information available.
2. If you search yourself for distressed properties and purchase from the
selling agent, you are paying a commission to someone with a vested interest.
Obtain objectivity in the sale by working with your own REALTOR. You won’t
pay any more. Technically, everyone works for the seller, since they pay the
commission.
3. With distressed or foreclosed properties, time is of the essence.
Purchasers must close on the date specified by the agency, and cannot close
after this without penalties of $25-200 per day.
4. It takes 1-3 weeks to qualify a loan. If you are approved for a loan, make
sure you are qualified by your lender as soon as possible. If you are paying
by cash, make certain funds are available. If finances are in order, the
REALTOR will then submit an offer. When the offer is accepted by both seller
and buyer, the REALTOR will submit the ratified contract to the lender and
closing agent. These steps will begin the process of a successful real estate
transaction.
5. When purchasing a distressed property, always obtain 3-4 bids from
different contractors to estimate costs of repairs, if you do not plan on
doing the work yourself.
6. If you are going to sell the property after rehabilitating it, ask your
REALTOR to research similar properties in the neighborhood to ascertain
market price.
7. Keep copious records for tax deductions. Any expenses related to the
purchase, repair, or maintenance of the property may qualify. Meticulous
records are key to a profitable real estate venture.
8. The title you receive after purchasing a distressed or foreclosed property
is a special warranty deed rather than a general warranty deed. Some buyers
are alarmed by this, but there is no need to worry. The purchase of title
insurance protects the buyer. Each lender purchases insurance to protect the
loan as well. Titling insurance should be obtained by the property purchaser.
It is always offered by the closing agent. Consider using an attorney instead
of a titling company as your closing agent. An attorney is only $50-75 more
than a titling company. A real estate attorney can remedy any situation that
may arise. Therefore, they are more efficient representatives on time
sensitive foreclosure properties. 9. Foreclosure properties require special
addendums and special contracts by the individual bank and HUD office (where
applicable).
10. Foreclosure properties are potentially the most profitable, but require
the most attention to detail. A REALTOR experienced in foreclosure deals is
highly desirable because the paperwork must be in order to submit a proper
bid, and timeliness is critical.
Elaine VonCannon is a REALTOR with RE/Max Capital in Williamsburg, Virginia,
and she manages investment property as part of her business. Her husband Joe
is a contractor who collaborates with her on rehabilitation of properties.
She has helped numerous clients invest in and make money on property
investments in Southeastern Virginia.
vonmor1@cox.net (mailto:vonmor1@cox.net)
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