HOW TO PURCHASE A FORECLOSURE

Look over your credit report

Before you start looking for a foreclosure property the first thing that you will need to do is get a copy of your credit report. If there is anything on your file that does not look right you will need to make the necessary corrections before applying for a loan.

Sort out your finances

Make sure that you have a good cash deposit; the days of no down payment are over. You are more likely to be approved for a loan if you have at least 25% of the total value of the property.

Look for a property

Once you have sorted out your finances you will need to start looking for a foreclosure home. Foreclosures are not difficult to spot, you can drive around in your neighbourhood of choice and locate them, they will be the houses that have not been cared for, and some may be boarded up. Find a few real estate agents and ask for their advice. Be careful of real estate agents because they will attempt to push you into a sale.

When you have found a house that you are interested in you will need to look at certain factors such as when was the house built? Has it had any work done on it? Is there any work that needs to be done at the moment? What are the schools like in that area, what are the transport links like etc?

Decide what you are going to do with the house

The next thing that you will need to decide upon is what is it what you are going to do with this house? Are you going to develop the property and then sell it for profit? Will you live in it yourself? Will you be renting it out?

Once you have made a decision and are ready to make an offer you will need to have a meeting with your realtor or attorney. One thing that you should remember when buying a foreclosure home is that it is sold in the condition that it is in. You will be solely responsible for making any repairs if repairs are necessary.

If you manage to get a contract you will need to pay between and 1 and 5% of the property value. If the deal falls through at the end you are not likely to get this money back. Buying a foreclosure can be a risky business so make sure you work with people that you can trust or you could lose a lot of money.

While you wait for the deal to be closed if the house needs any type of repair start looking at contractors.

Once the deal is closed go into the property and have all the utilities turned on, e.g. light, water and check for any damages.

While you can make a profit with foreclosures it is a very risky business so do not rush into it.