Real Estate

Buying A House At Below Market Value

Story Published on April 30, 2009 ⋅  Email this Story ⋅  Print this Story ⋅ Post a comment ⋅

Purchasing a home that is under the market value is a great means of gaining more money when investing in real estate. One way to locate property which is under market value is through a foreclosure auction. Real estate ends up being foreclosed on when the owner doesn’t pay the mortgage soon enough. When these payments aren’t up to date, it’s then a distress property. Nothing may be wrong with the home in a physical sense, but it is still called distress property.

When the house is in this status, its owner is given some time to make the payments; however, if the owner doesn’t bring the house payments up to date, the bank which holds the house’s mortgage may engage in foreclosure. At that point, the bank is in control of the home and will attempt to sell it in a foreclosure auction. During such an auction, the one with the highest bid then takes control of the home from the bank. If the price is not high enough, the bank won’t sell the property. Some auctions will begin at the price that the bank is willing to sell the property for. Finding such auction demands a bit of work. You can find foreclosure auctions online or in the newspaper.

Another strategy is to buy foreclosure lists online for your area. It’s vital to do some research on these homes to see which ones might interest you. It’s also essential to research these homes so that you will not bid too much. One way to do this is to go and physically look at the homes that you think you may be interested in and do your own evaluation of their true value. Very likely, you won’t get to see the interior of the home, but you can still evaluate it from outside. You must stay off the actual property if possible. You do not want to get in trouble for being a trespasser. It’s a good idea to take some photos and write up some notes on the home; this is a great way to help yourself make the decision about which homes you might want. It will also help you decide on how high you are willing and able to bid. When it’s time for the foreclosure auction, stay with your assessments and don’t bid too high. You might not win your first choice, but it’s better to get the second or final choice below market value than it is to pay too much for the first choice.

Purchasing foreclosed properties requires some effort, but the money you save is absolutely worth the work.

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