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Tips for Investing in Distressed or Foreclosed Properties
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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outdated, some may be incorrect, and some of the available properties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.
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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 wont pay any more. Technically,
everyone works for the seller, since they pay the commission.
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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.
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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.
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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.
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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.
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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.
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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.
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Foreclosure
properties require special addendums and special contracts by the
individual bank and HUD office (where applicable).
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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.
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