Should I Avoid Buying Foreclosure
and Short Sale Properties?
Maybe. Maybe not! Every home buyer is different. Every situation is different. There is no standard answer. The first thing you need to know is your motivation for buying a home. Are you buying it as a principal residence? Are you buying it to fix and flip? Are you buying it to fix and hold?
You will also want to know about the current market conditions. Your time frame for moving in, how much money you want to spend, and how much work you will be willing to do at a home are also important factors.
Buying foreclosure homes can be a great idea. The licensed real estate agents at DMS Properties, LLC Residential Real Estate Services have purchased three so far. Each one is now generating monthly rental income. We will gladly tell you about them!
There are many things to think about. You should start by reading our Guide to Buying Foreclosure, Short Sale and other Investment Properties so you will know what to expect. Sometimes, the banks that are trying to sell a foreclosure home have made the repairs that are needed. In many cases, though, the homes may need lots of work. They are usually priced according to the condition.
Short sale homes can be very challenging. In most cases, buyers should avoid short sales IF they have a deadline for relocating. On the other hand, if the home buyer is in a position where they can wait for the short sale process to run its course, then a short sale might be a great idea. The short sale process can take anywhere from four to eight months or longer. Be careful, though, not to enter into a contract on a short sale without knowing the AFTER-REPAIR value (ARV). You will want to have us learn the fair market value of the property. Once we know the ARV, we can help you to determine if the purchase price plus the cost of any repairs make it a good deal. Whether you are looking at buying a foreclosure or a short sale, you will want to know the return on investment (ROI) of the property.
A short sale that is priced too low will never get third-party approval and you could waste a great deal of time! We are available to discuss the process with you, so before you start the home buying process, Contact us to schedule an appointment to discuss your needs.
Please be sure to review the other FAQs From Home Buyers if you are interested in buying a home. Also review the other FAQs from Real Estate Investors to learn more about real estate investing.