Is buying foreclosures in Houston a bad idea? Read this article to find out….
If you want to be a real estate investor and you like being hands-on. A great way to do so is to purchase a home in foreclosure.
Not sure what a foreclosure is, read this article.
You see it on reality TV shows all the time where an investor buys a home at a low cost, do the repairs and upgrades, then sells it for a large profit.
TV magic makes the process look very easy, but the good news is its not that hard in real life.
Here are five things you should know about buying foreclosures in Houston.
Inventory is Dropping
One of the first things you need to be aware of when buying foreclosures in Houston is that the overall availability of foreclosed properties is shrinking.
There are fewer and fewer foreclosures every day, and the ones that are available are being purchased quickly by home investors.
In many cases as soon as a foreclosure is listed on the MLS, there are multiple offers driving up the price making it hard to get a good deal.
We can help you locate foreclosures in Houston, give us a call at 832-535-2034 right now.
Purchasing at An Auction
Unless you are an experienced real estate investor with a large amount of cash to pay for a property, buying foreclosures at an auction is probably not a good idea.
At the foreclosure auction, you are not allowed to enter the house nor have it inspected, so if you do win the property, you have no idea what condition the building is in and you may ultimately lose out.
If you don’t want to lose money, stay away from this option until you are a seasoned investor.
You can still get a good deal on a foreclosure if it is bank owned, but you may have to make a higher bid if other foreclosures are selling quickly.
This means other people are buying foreclosures fast, and if you really want to get in on this action, you may have to start off with an offer that is close to, or at asking price.
If there are multiple offers, you may have to offer higher than asking price and try to keep the contract contingencies to a minimum if you really want that foreclosure.
Remember, location and amenities matter, other foreclosures may be selling quickly if they’re in a great area.
Have The Home Inspected
In most cases, the seller of a foreclosure is a bank, so there is not a traditional seller to make repairs before closing.
The bank will not likely fix anything wrong with the home. They are selling it to try to make as much money back on their investment as possible.
Make sure you include an inspection contingency so you can hire an inspector if you are making an offer on a foreclosure, that way you will know exactly what you are getting into if the bank accepts your offer.
Buying foreclosures in Houston may come with additional costs above and beyond the purchase price and closing costs.
If the owner couldn’t make the mortgage payment, you can probably assume he or she did not pay the real estate property taxes or homeowners association fees if the foreclosure is in a community.
You might also become responsible for any utility bills, home equity lines of credit, or other liens on the property.
Make sure the title company takes these factors into account when preparing the title commitment.
You will also have to take into consideration the additional cost of making the necessary repairs or cleaning when you buy a foreclosure.
There is no cleanup requirement when these properties are seized, and the previous owners might be a little upset about the bank foreclosing on them and take it out on the property.
Repairs to the home might also increase the assessed value and raise the taxes.
ARE YOU THINKING ABOUT BUYING FORECLOSURES IN HOUSTON?