How to Buy Repossessed Property

You have probably seen the notice of foreclosure in your local newspaper and wondered what happened to those properties. They are advertised since the mortgage payments have not been met and so the bank is foreclosing on the loan and offering the property to the public in hopes that it will make back the money still outstanding on the loan. If you attend these public offerings, you will see properties being exchanged at far less than the market value. Although it can be a great way to pick up property for investment purposes, it can also be risky if the proper investigating homework has not been done.

Instructions

Difficulty: Moderately Challenging

1. Start reading your local newspaper's foreclosure listings. You can find a list of everything that is going before the court with a date of the case. Go to the court house and watch what happens. Before you jump into such an investment, do a little homework. See what other repossessed homes are selling for and take a look at them to see what your local real estate values are in the investment business.
2. Go to the property that has been repossessed. It will probably be locked and may even have tenants so be courteous. The most you might be able to do is drive by and look around at the neighborhood. If it is vacant, try to peak in the windows (try asking the listing agent for permission first) to see what the inside condition is liek and what kind of construction it is.
3. Go to the county clerk's office and check out the listed information available. You might have to pay a few dollars but you can get a wealth of information. Also ask your real estate agent to find out all they can on the property.
4. Check out tax records online. Many states now have searchable databases that list every property and who owns it, the square footage, the previous owner as well as the assessed value of the home.
5. Save your money. If you do go to an auction with the intent to buy, you better be ready to pay about 10% down and be able to finance the rest within 30 days. This will require you to either have a line of credit with the bank or have preapproved a mortgage for this purpose.
6. Do your math. You will need to know what your top dollar can be based on the rental market for the area as well as the money that will be invested into rehabbing the property. Figure in interest, closing costs, back taxes and lawyers fees. Keep it business and do not let it get emotional. If someone else wants to bid more than your top dollar - let it go, more deals will come along.