Buyer Beware of Huntsville Foreclosures: Are Foreclosures Really Unbeatable Deals?
With the housing market in a decline, and foreclosures on the rise, many people have the idea that buying a foreclosure could be the deal of a lifetime. While it’s possible to find a house in foreclosure for less than market value, making this kind of purchase is not a good idea for the real estate novice. Huntsville, Alabama real estate agent Mike Manosky offers professional advice to consider so that supposed "unbeatable deals" don't turn into quick and painful losses.
Preparing A Bid
Check with a local real estate agent before making a bid. The mortgage company wants to cover the balance on the loan plus any expenses they might have. If the home in question was overfinanced, however, or the market has dropped in that area, this foreclosure property might not be a bargain.
Foreclosures are usually sold “as is.” Inspecting the property before making an offer is a vital step. If it isn’t possible to do an inspection first, include a provision in the contract that allows for an inspection right away.
Calculate the Cost
List the needed repairs and their costs. If the seller isn't willing to pay for the repairs, have a contractor provide an estimate and timeframe. If a contractor isn't immediately available or if repairs will take an extended amount of time, a loss could occur.
Flipping Property
For those planning to buy a home at a low price, make the necessary repairs, then quickly sell it at a profit, remember this is often easier said than done. Before jumping into this commitment:
1. Know the Market. Don’t put more cash into a home than is feasible to get back. Contact an agent that’s familiar with the local real estate market for help.
2. Have a Reliable Contractor. Every month the house isn't occupied adds another out-of-pocket expense for the flipper. Can a three or four month delay to complete repairs be tolerated financially?
3. Consider Commissions & Fees. The seller typically pays for commissions so those should be built into any offer. Also, sellers don’t normally get their original asking price. Leave some room for negotiating.
Buying a foreclosure isn’t for everyone. Those who don’t know what they’re doing can quickly lose money. Before taking on this task, talk with a qualified agent familiar with the market.
For additional information or media interviews, please contact Mike Manosky at (256) 508-0211 or via email at Mike@MoveToHuntsville.com.