The question posed most often to me this past week? How do I find a foreclosed property? Everyone wants a good deal and most people seem to think this is the way to find them! and they're right!
First, lets expand on foreclosed properties...what you are actually looking for is DISTRESSED properties--they do not necessarily have to be foreclosed. Distressed properties include foreclosed homes, neglected homes and/or abandoned homes. They could include seized properties, estate properties and properties with out-of-town owners.
Finding a foreclosed property is relatively easy...check with the courthouse, reading the newspaper and checking out government sites like http://www.hud.gov/homesale.html that list government foreclosures (HUD, VA, Fannie Mae, IRS, etc...). HUD and VA also list properties in local newspapers on designated Wednesdays and Thursdays.
If you are a keen observer you will spot the foreclosures in your target area well before they are actually posted for sale--which will give you ample time to research your top-dollar bid. I suggest you drive a different route (thru neighborhoods) everyday and look for properties with overgrown yards, possible neglect, or graffiti. If power has been shut off the electric meter will either be removed or turned to the side--that's a clue the property is abandoned. I suggest you focus on neighborhoods that have "low money down" or HUD/VA financing specials/incentives--they usually have a larger number of foreclosures because they appear to cater to the homeowner that really could not afford the home in the first place.
Research the property be searching the tax assessor files of your county through the internet or in-person. If they are not updated, perhaps they will lead you in the right direction. Also, don't be afraid to ask the neighbor--I have found them to be a wealth of information! You should prepare yourself by having a good knowledge of the values in the area and an idea of what cleaning and repairs are needed.
Deciding what to bid on a foreclosure can be tricky. Let me tell you this story...A few years ago there were two houses that were on the market for over a year with a real estate firm--both were foreclosed properties that were horribly in neglect, abandoned and vandalized--one even had a small fire. The smaller house was on the market for $40,000 and sat there--it never sold. The larger was on the market for $79,000 and it, too, never sold. Homes in the areas sold for mid $60's and $130's respectively--but these homes were horrible!!! The real estate firm recommended that the lender auction these properties off in conjunction with another real estate auction--perhaps they could unload them there...Well, customers, who had NEVER seen these homes, got caught in the excitement of the bidding wars...and paid $76,000 for the home that was available for $40,000 and $109,000 for the home that was available for $79,000. Every agent in attendance (self-included) just about choked--we were laughing really hard but also amazed that people would do such a stupid thing... Later I found out one was a rather arrogant doctor trying his hand at "investing"--he bought the more expensive of the two homes and renovated it. Three years later he sold it for $124,000, I am told. He didn't make much of a profit, considering he had $50,000 in repairs/renovations...OUCH! That's an expensive lesson to learn--but let it be at someone else's expense--DO YOUR HOMEWORK!
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