Tips on Foreclosure

I recently went to a class on Distressed Property. I am now certified to sell this type of property and here are 6 tips for buying foreclosures:

1. Use cash or get pre-approval from the lender you are buying from – Cash is king. Many banks will take a cash offer before they even consider a financed offer. If you are getting a loan, get pre-approved from the lender you are buying from.
2. Don’t get caught up in bidding wars – Competition will bid up the price, do not get caught paying too much in a bidding war. Stick to your criteria. 70% LTV max with strong cash flow.
3. Evaluate lots of deals – Some fall in love with one deal and do whatever they can to make it work. It is highly recommended to fall in love with tons of great deals and then to evaluate and purchase best one. Make sure to always have more than one great deal in your pipeline.
4. Contact the lender directly – Creating relationships with asset managers can give you an inside track on short sales.  If the bank takes the property and you make an offer quickly, it can result in a deal without other bidders.
5. Target fixers – Move in ready homes will have more competition, targeting fixers will allow you to buy at large discounts and add value through rehab. Make sure you have a contractor look at it, do your inspections and due diligence.
6. Talk to the listing agent – Asking the listing agent if you should write an offer and at what price sometimes will give you an edge. They may tell you what the other offers are at or that there are no offers and you may be able to find out the banks bottom line. If the listing agent represents you then they have extra motivation to get your offer excepted as they have the incentive of a double commission.