April 15, 2021 at 10:42am | BBHST Admin
By Kyle Spearin

Foreclosed properties present a unique real estate opportunity for those who know how to navigate them. While some people assume that a foreclosed property would be a problem or could be considered a bad thing, investing in these properties can actually be incredibly advantageous. Even though foreclosed properties are acquired through unfortunate circumstances, they can be a wonderful opportunity for investors. In this article, we will discuss the major benefits that can come with investing in this kind of property.

Definition of Foreclosure Properties

Foreclosed properties are properties that were previously owned by another owner. The owner made an arrangement with a lender in order to be able to fund the property. At this point, it became the owner’s responsibility to make payments to the lender. If the owner becomes unable to make the payments to the lender, then the lending company is within legal rights to reclaim the property. When this happens, the lender will sell the home to someone else quickly in order to try to satisfy the debt and make some of their money back. The group or lender will generally auction the property off to a bidder, which means that there is an opportunity for a potential buyer to get a great deal.

Advantages of Foreclosure Properties

Investing in foreclosure properties can bring some pretty distinct advantages. These properties present fairly unique opportunities that can benefit property buyers when the timing is right. It is a great way to find some more compelling properties that others might not be aware that they have access to.

Below Market Value

When it comes to successful real estate investing, the real key is to find great deals on the properties that you invest in. Something unique to foreclosed properties is the fact that there is always going to be a great deal. In most cases, these properties can be a steal of a deal. Since the bank will want to make the sale as soon as possible, they are more willing to accept a lower price than a typical homeowner would be. With this change, you can get really nice properties for much lower than they would generally go for at standard market value. If you love a good discount, you will love buying foreclosed properties.

Quick Closing

Banks and lendersof all kinds want to reclaim the money that they lost with the original homeowner. Since this is the case, they are distinctly interested in making the sale as quickly as possible. For a potential investor, this is great news. Not only will they aim to make the process as easy and simple as possible, but they will also be ready to hand it over to you as soon as possible. Since this is the case, it means that you can get to work on making any property that you buy into a sale-worthy new product sooner rather than later. It is always nice to purchase a property quickly so you can move forward with your plans for it. 

Less Competition

Even though more people are becoming savvy to the power of investing in foreclosed properties, there still aren’t that many people who do it. When you look for a traditional property, you will generally find yourself facing a lot of competition. This can make it harder to make the deal and might even drive the price up. Since foreclosed homes are sought after by less people, the chance that you will be able to land the property is much higher.
Competition is a huge problem when it comes to real estate investing. It can make it more difficult to find properties and obtain them, particularly if you don’t have an abundance of funding. The lack of competition makes it easier for you to find a good property at a comfortable price point. By focusing on properties with less competition, you are more likely to be satisfied with the properties that you are able to obtain. It is a nice change from traditional real estate investing. 

Negotiation Matters

Any time that you purchase a property, you will always negotiate the price. No one wants to spend more of their money than they have to. With traditional properties, the seller has the ability to negotiate for more. With foreclosed properties, you have a lot more in your court when it comes to negotiations.
The first reason that you have this ability is because the lender desperately wants to make the sale quickly. While someone might offer more down the line, generally they don’t want to wait for this to occur. For you, their property is an option. For them, the sale is a necessity. This generally makes them more lenient.
In addition to a general need to move the property, foreclosed homes can be somewhat rundown or uncared for. When this occurs, you can lean on a property inspector to find every last flaw. Then, you can use this information to further negotiate the price, just like you would with any other house. Ultimately, this means that you can get an already cheap house for even less money. 

Higher Rate on Return

The biggest benefit of investing in a foreclosed property is without a doubt the return. Since you are getting the property for cheap, it is incredibly likely that you will be able to sell it for a lot more. While some foreclosed homes might require some amount of repair or restoration, the cost is generally not going to be high enough to force you to break even when you actually sell the home. With this benefit, you are pretty much always able to make a distinctly higher amount than you spent. Unlike a traditional property that is purchased at a higher price, foreclosed properties allow you to get the most out of your purchase. In the end, this can make them quite a wonderful investment!


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