A huge difference exists in investing in pre-foreclosed properties and a property that has already been foreclosed on. Once the property is owned by the bank, there are certain things that you must remember in order to increase the odds of you winning the bid for the property you want to purchase. The rest of this article will explore some of the things you need to think about before you bid on that property.
Know Market Value
You must understand the market value of the area around the property. Even though a bank might be desperate to get rid of a foreclosed property, they are not going be dumb with their money. Banks have Realtors working for them as well. They know what a property should sell for. Banks do realize that foreclosed properties are not going to sell for market value. When you know what the market value is, you can plan your bidding strategy better.
Analyze the Value
Once you have taken the time to analyze the value, you have more wiggle room with the banks. Banks are well aware of the fact that they will not get the full market value for the property. They understand that the final sale price will depend on the renovations that need to be done. Therefore, the bank is willing to let the price slip a bit.
Know Your Limit
It is important to know what your maximum limit is. You need to make sure that you account for the amount of money you will need to make the repairs when you make your bid. You don’t want to win the property and then not be able to fix the property up. Knowing the market value will help you determine what your maximum bid will be.
Put Cash Down
We’ve all heard this saying before. Money talks, and everything else walks. Be sure that you have cash to put down on the property. This can help you secure the property away from someone else that still has to go line up funding. You may have to get financing later on to renovate the property, but it is vitally important to have cash to lock in the property you wish to invest in. Banks are not in the business of holding property. They want money. If you can show the bank you have cold hard cash, they will be a lot more interested in hearing what you have to say.
Foreclosure bidding strategies are pretty straightforward. Know the market value, understand what it will cost to repair the house in the current condition, know your limit in respect to the repairs that need to be made, and bring cash with you to flash around and show you are serious. Get out there, win those bids, and sell some pretty houses to your hard working neighbors.