Buy low and
sell high. It’s the universal axiom of investment. Whether you’re putting your
money in the stock market or investing in your first piece of real estate, the
goal of getting the most bang for as little buck remains the same.
It should come as no surprise, then, that many prospective real estate investors look to foreclosures as a golden opportunity. On average, according to US News, investors can save as much as 15 percent buying a foreclosed property compared to a non-foreclosed property.
The world of foreclosures, however, is a complicated one, brimming with misconceptions and pitfalls. That’s why we at Better Homes and Garden Real Estate Elliott Coastal Living are here to offer professional insight into the world of foreclosures. Throughout the course of this article, we will be shining a light on foreclosure investment. Together we will learn just what a foreclosure is, what are the risks and rewards associated with foreclosure investment and ultimately how you can mitigate those risks to maximize your savings and subsequent earning potential.
What is a Foreclosure?
Foreclosure occurs when a lender seizes a property from its previous owner to recuperate any debt still owed on the property. Typically, a homeowner can no longer make the mortgage payments and as a result defaults on the loan. After the delinquent owner has vacated the property, the lender turns around and sells the property to get their initial investment on the property back. This usually results in the property selling at a significantly discounted price that falls well below the property’s market value.
A common misconception that prevents prospective home buyers from considering a foreclosed home is the faulty belief that foreclosures only occur with low-end homes. Ask a person to imagine what a foreclosure might look like, and their thought’s will invariably run to ramshackle properties left to rot in the elements by negligent homeowners. The truth, however, is that this is not always the case. Foreclosures can be found in every price range and in any community.
What are the benefits of investing in a foreclosed property?
The benefits of purchasing a foreclosed property can be summed up with a single word—savings. As previously stated, a lender is typically selling a foreclosed property to recuperate their initial investment. Because lenders are typically interested in selling the property as quickly as possible, the asking price for a foreclosed home is usually well below the market value for the property. This translates to a greater earning potential.
What are the risks associated with investing in a foreclosure?
While the
earning potential for a foreclosed property is high, there are many significant
risks that should be considered before starting the lengthy home-buying
process.
It’s
important to understand that a foreclosed property is being sold “As Is”. This
means that any necessary repairs will come out of your pocket after purchasing
the foreclosed upon property. As many lenders will not allow inspection of a foreclosed
home before hand, purchasing a foreclosed home may mean purchasing a property
in desperate need of repairs. These repairs can quickly add up in terms of both
time and money.
Furthermore, once an investor takes possession of a foreclosed property, they also inherit the various financial obligations attached to that property. As the property was foreclosed because of the previous owner’s failure to pay down their doubts, it’s common for a foreclosure to come with various liens and financial obligations attached to the property. This may include costly amounts of construction loans, unpaid tax obligations and more.
How Can You Mitigate Your Risks?
There are a
few things you can do to mitigate these risks. First, arm yourself with as much
information as possible. If possible, get a professional inspection of the
property to check the home for any signs of damage. Although buyers often
cannot inspect a foreclosure property, that is not always the case. Ask a real
estate agent or the seller about hiring a home inspector.
Beyond
hiring a professional inspector, look through public records to try to find out
as much as you can about the property’s history. As liens are typically
recorded with the county clerk, a thorough inspection of public records may
reveal any outstanding debts attached to the home.
Most importantly, you should never go into a foreclosure deal on your own. Regardless of the foreclosure you are looking at, you are always going to need the guidance of a professional realtor to negotiate the complex terms of a foreclosure deal.
Where can you find a realtor you can trust?
Over the
past decade, Myrtle Beach foreclosures have become increasingly popular among
buyers looking to purchase real estate along the Grand Strand. Whether you are
looking for your primary residence, an investment opportunity, a vacation
rental, or land – Myrtle Beach foreclosures are a worthwhile investment
opportunity to discuss with your realtor.
If you
believe foreclosure investment is right for you, turn to your friends at Better
Homes and Garden Real Estate Elliott Coastal Living. For over 60 years, the
friendly staff and professional realtors of Better Homes and Gardens Real
Estate Elliott Coastal Living have been helping people find their forever home
in the Grand Strand.
Visit our website, give us a call or stop by our office today to speak with a professional realtor about the various foreclosure opportunities available in Myrtle Beach.
