The Best Place Ever for Foreclosure Bargains

Considering it is still a buyer's market, there is no better time to go house hunting than now. The market is currently brimming with cheap homes such as foreclosed properties and finding good bargains has become an exciting game for many real estate investors.

Being new to the foreclosure buying and bargain hunting scene, it will most likely lead you to ask many questions about how to be successful in this particular endeavor. Here are just some of the questions you might ask yourself:

1. How do I know what is a good deal? And How do I know?

Finding out if you are getting a good deal will naturally mean looking at the price tags. Foreclosed homes are usually sold about 40 percent less than other existing homes for sale. Of course, being able to buy a home at a price lower than its current market value also means enjoying instant home equity. These are the top reasons why a lot of real estate investors choose foreclosures.

2. where is the best location

It is only natural for a buyer or investor to gravitate towards states or cities like Detroit and Las Vegas hit hardest by the foreclosure crisis. For certain, there would be plenty of cheap repossessed homes for sale in that particular market. But if you want to invest in a neighborhood where property values are expected to go up, you should check out the local economy, in particular the unemployment rate. It would also be smart to investigate the diversity of the local businesses.

3. what is worst mistake and how to avoid them?

Underestimating the budget for repairs Many buyers trying their hand at foreclosure buying make the mistake of setting aside a small portion of their budget for repairs, thinking they would not be spending much. But you have to understand that to the trained eye, your foreclosed home might be hiding serious problems. To avoid this, make sure you have inspected the property thoroughly or hired a professional inspector. Walking through the property with a trusted contractor could also help you get an idea about the work needed to be done and how much it will cost you.

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4. Can renovation cost be added to my total loan?

If you will be taking out a mortgage loan to buy the foreclosed home and would like to include the cost of repair, you might have to do some research when it comes to finding a lender who would agree to your request. Or, you can avail of the Federal Housing Administration's 203k rehabilitation loan program, which will only require you to put down just 3.5 percent of the total loan amount as down payment.

5. If bidding war is necessary, if not, how can I avoid them?

Despite the many cheap homes for sale, there will be only few with sellers who can offer really huge discounts in order to sell the property quickly. Obviously, these homes will attract a horde of buyers. Do yourself a favor and avoid these homes. You can expect the asking price to go up as buyers try to outbid each other. You will be surprised that, with a bit of patience, you end up with your dream home and paid only a low price for it.