Practical Advice on Judging a Foreclosure File
People usually think that the first thing to do when dealing with foreclosure properties is to decide which one to actually consider buying.
Actually, it’s not.
The first thing to do is do NOT even attempt to pass judgement just by looking at a foreclosure file. It simply doesn’t make sense to try distinguishing the difference between a good prospect and a bad one simply by the figures and details available on hand. If you’re considerably knowledgeable on the matter, you may be able to discern which properties have more equity than another – but that doesn’t mean you’re going to get a nice profit just because of that.
Analyzing data doesn’t cut it; actually writing an offer for a property does. For example, you may consider a house that looks like it’s a great deal on paper – maybe it boasts of a lot of equity – but what you don’t realize is that it severely needs repairs and you’ll have to shell out more than $20,000 in renovations before you can even offer it for lease, or have it up on the market. If this scenario sounds very likely, that’s because it is!
Meanwhile, you may find another house that is financed 100% inclusive of its arrears but still has $7,000 in arrears in outstanding balance. It doesn’t look very appealing, yes, but what you don’t know is that the property is very well maintained. It has a suite bedroom, a modern garage, and can easily generate a cash flow of $300 every month. That changes everything, doesn’t it?
It’s such a good deal that it now makes sense to pay for the full market value of the property. Of course this is not an everyday deal, but when you find a really good deal, it’s definitely worth considering.
Now, what about location?
First of all, it’s not always necessary to be picky about the location. Don’t stick your nose up in the air and decide whether you want to buy a property or not based solely on where it’s located. It’s not unheard of for a property owner in a less-than-desirable area to give as much as 20 percent discount off the current full market value, while an owner in a reputable area will only budge to give no more than 10 percent discount.
It boils down to profit, plain and simple – not on whether your profit came from a beautiful house or a very modest property. As long as it’s not located in a war zone, it should be okay.
Another thing you may be worried about is figuring out which particular owner will sell his property, and which won’t. But this is a safe bet: there’s really no way of figuring out which owners in which particular areas will sell, more so at the price you want to shell out. The only way to work out this dilemma is for you to actually talk to the owner and discuss the possibility of buying the house you’re eyeing.
Rather than trying to analyze foreclose data, you’ll be better off drafting new marketing campaigns. That’s much more productive than making yourself worried sick wondering if you made the right decision in the foreclosure property you’ve decided to pursue based on files alone.