There are so many foreclosed properties on the market, how can you know which one is right for you? Looking at many foreclosures can be exciting – these homes are often priced well below market value and therefore they seem like an amazing investment. Many are a great bargain, but to find the investment that is truly right for you in the long-term, consider looking for a few specific traits in every foreclosed property you consider.
One of the first things you will want to look for in a foreclosure, for example, is equity. Equity refers to the value of the home that is not encumbered by a mortgage. Foreclosure real estate is wonderful for helping you enjoy more equity because most foreclosed properties are sold with built-in equity since they are sold below market value. Let’s consider an example. Let’s pretend that you have found an HUD home that is worth $200 000. Since the home is being sold as an HUD foreclosure, it is priced at $170 000. The home offers you $30 000 in equity up front. This is important, as equity builds your credit rating and may qualify you for a lower mortgage rate as well. The more equity a foreclosure has, the better.
In addition to equity, you will want to find a foreclosed home with the potential for sweat equity. This means that you will want to find a home that needs some tidying up and maybe a few minor repairs that you can complete yourself or hire someone to complete for a small sum. Foreclosed homes that need a little work are often priced even lower, because the first impression they make on buyers isn’t perfect. By putting in a few weekends of work, you can often increase the value of these properties – and increase the equity in the home as well.
In addition to equity and possible sweat equity, you will want to look for a foreclosed home in a great neighborhood. You will want to find a foreclosure in a community with a low crime rate, good property values, and a good real estate market. It is usually not difficult to find such a community. Just look to where property rates are increasing and where everybody wants to buy. Buying a home in a nice neighborhood ensures that your property has good resale value. It also ensures that your insurance costs are small.
Even if you are buying a foreclosure home just as a primary residence, always consider the potential for profit when buying a foreclosure. If you had to sell the home or wanted to rent it out, would it make financial sense to do so? Find a foreclosed property that could make you money if you needed it. It’s a wonderful way to ensure that your new purchase safeguards your financial future.
One final thing you will want to find when buying a foreclosure is a motivated seller. A motivated seller is someone who wants or needs to sell a foreclosure quickly. For example, if a foreclosed home has been on the market for six months or more, a lender or HUD agent may be more willing to consider several offers on the home – even lowball offers. If you are purchasing pre-foreclosures, a homeowner may be very motivated to sell if the date for the foreclosure auction is soon. Look for sellers who are willing to consider all reasonable offers – this means that your offer might be accepted.
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Getting the help of a reputed Colorado Springs REALTOR can be the best way to find a foreclosed property in the Colorado Springs real estate market. You may find one that suits you best in terms of style, location and budget. If you have any questions about Colorado Springs commercial real estate please contact Mike Stuard.
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