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Before You Buy
a Foreclosure Property, Do Your Homework!
Online tools allow you to evaluate potential purchases from the comfort of your
home
By Rick
Sharga, Vice President of Marketing for
RealtyTrac
There are two words that give pause to the most
motivated real estate buyer or investor: property research.
In the past, property research equated to
extensive legwork — often involving a trek down to the local recorder’s office —
and expense that was spent evaluating a property’s market value and all the debt
encumbering the property. But now a few clicks of the mouse on
RealtyTrac will get you that same information for properties nationwide:
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Comparable Sales: provides up to 15 recently sold properties in
the neighborhood so you can pinpoint the property’s true market value.
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Lien & Loan History: provides a list of all liens and loans
(mortgages and trust deeds) against the property so you can calculate the
total debt encumbering the property.
These reports are available for hundreds of
thousands of properties found on
RealtyTrac, the nation’s most comprehensive and convenient online
marketplace for homebuyers, investors and real estate professionals, with more
than 550,000 properties updated daily. You can also
order individual property reports for any property nationwide.
Thorough research has always been crucial to
determining a property’s investment potential. But the tools and resources
needed to do that research are much more accessible now than ever before.
“When buying a property, the right examination
and due diligence on the part of buyers can significantly improve their ability
to make a strong investment,” explains James J. Saccacio, chief executive
officer at RealtyTrac, which also maintains the nation’s largest database of
pre-foreclosure, auction and bank-owned properties.
RealtyTrac can help investors and homebuyers tap
into the previously hidden foreclosure market by providing access to property
data formerly available only to professional real estate brokers and investors.
Today, homebuyers can use these services to identify and research potential home
purchases, as well as to find the tools and professional resources they need to
help them close the deal.
It makes sense to give any property under
consideration — foreclosure or otherwise —an in-depth examination. First, check
the Lien & Loan History for all debts secured by the property. Subtract the
total amount owed from the estimated market value, based on the Comparable
Sales, to determine the potential bargain. After making contact with the owner
or real estate agent, arrange a walk-through of the property to evaluate its
condition. Factor estimated repair costs into your purchase offer. Before you
close the deal, hire a professional home inspector to inspect the property and
enlist a title company to run a final title check.
If you purchase a property at a public
foreclosure auction, you won’t have a chance to inspect a property before
buying, which makes this type of purchase more risky. But if you’ve researched
the title and determined the amount owed is far less than the market value,
you’ll have some margin to cover unexpected repair costs. Before you go to the
auction, set a maximum bid based on your research and stick to that bid at the
auction.
Although you’ll be able to inspect the property
if it’s bank-owned, the bank typically knows little about the property and will
sell it in “as is” condition. This means the bank will disclose all the needed
repairs it knows about, but is not held responsible after the sale for any
repairs it did not know about. Factor the known repairs into your purchase offer
and have a professional inspection conducted before closing the deal. You should
also have a title company run a final title check before closing, although most
banks will make sure the title is clear before selling.
No matter what type of property you’re planning
to buy, good property research will help you recognize which properties
represent smart investments and which do not. And that research is now much more
convenient thanks to the extensive property research tools available online
through RealtyTrac. Remember, a little preparation before the sale can help you
reap huge benefits. So, it’s worth your time and energy to do a little homework!
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