Inflation is the top story in the global economy. It is negatively affecting many homeowners that are struggling to keep up with bills. An increasing number of homes are being foreclosed due to the cost of living.
In fact, Illinois has the highest foreclosure rate in the nation. One out of every 762 homes was repossessed last year.
While foreclosures are tough on homeowners, they also present an opportunity for investors. Read on to learn how the best real estate investors find a foreclosure. Explore tips and advice for purchasing distressed properties and making a sound real estate investment.
How to Find a Foreclosure?
In the past, it was not easy to identify a foreclosure. Banks may advertise an auction on the radio or in a local newspaper. Many found out about foreclosures through word-of-mouth.
The good news is that there are so many ways to find a foreclosure in today's digital age. There are websites dedicated to finding distressed properties and other homes for sale. The Multiple Listing Service (MLS) often identifies foreclosures in the notes.
Another strategy is to bring in a real estate professional to help. A property management or real estate company finds out about foreclosures before the average investor.
What Are the Types of Foreclosures?
It is important to get smart on the type of foreclosures before you invest. The foreclosure type is going to drive your negotiation strategy.
For example, some homes are in the pre-foreclosure phase. They are not going through the formal foreclosure process yet.
Here, homeowners are given a brief period to sell their home before it goes to foreclosure. The homeowner does not have as much leverage as a traditional sale due to time pressure. However, they are likely to sell the house for more than a short sale or foreclosure.
A short sale is a mechanism for the bank to cut their losses on the loan. The homeowner is underwater, meaning they owe more than the property is worth.
The bank agrees to accept less than the home is worth to move it. Short sales can take months to get through the bank's approval process.
Many foreclosed homes go to public auction. Here, the local government auctions the property to the highest bidder. This is a great way to land a steal, but you may face some stiff competition.
There are also bank-owned or government-owned properties to buy. Both entities do not want to be a landlord and are willing to sell for less than market value. The further removed a homeowner is from the sale, the greater the potential return on investment is.
Your Guide to Purchasing a Foreclosed Home
You are now ready to start shopping for a foreclosed home. Buying foreclosed homes is a popular way to invest in real estate. You can buy homes for significantly less than market value this way.
The key is knowing how to operate in this environment. It is a competitive space and the most experienced buyers have the most success. If you are shopping for foreclosures, contact us today for expert assistance.