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Things You'll Want to Know About Your Foreclosure Property |
One of the things real estate investors will need to learn is how to pre-qualify a property completely online so that an offer can be made. In my system of tools and resources, I teach that the first assessment of a property should not take longer than ten minutes, unless the property is already under contract. We just want to know the basic idea of whats going on in the neighborhood.
During the pre-qualification process were assessing two things. The first is finding out what the ARV, or after repair value, is for the property you are looking at. You can also get your Realtor to find out this information for you, but I don't recommend that because Realtors can slow down the process and it's good to be independent from other points of view in this process. There are also online resources that will give you this information right away. They are www.realestateabc.com and www.bankofamerica.com. I recommend taking a look at these two sites and not relying on just one for source for information.
Another great resource that I use is Google Earth. Basically youre looking for the condition of the neighborhood and to make sure that there arent a lot of vacant lots or board ups or burnouts. On this site you can pick a specific neighborhood or a specific zip code depending upon what you wanted to look at.
Investors should also be taking a different approach to making offers. Intuitively people make one offer at a time and hope the deal will go through. What Id like you to consider is to pre-qualify enough properties so that you can place 10 to 15 offers every week.
In the top foreclosure marketplaces of the country where I do business, I lowball my offers because those markets are so saturated with foreclosures that the banks really dont have much of a choice. These banks are always willing to negotiate just about any offer that comes in, if the days on market are significant. Banks can only have so many liabilities or nonperforming mortgages on their books, so they will sell when a legitimate offer comes in.
Once your offer is accepted by the bank, you typically will have about five to seven days before your earnest money deposit is non-refundable. Within that five to seven day time frame, investors should usually do four or five different things for due diligence. They are:
1) Get a cost estimate of repairs done by local contractors.
2) Have a rental market analysis performed by your property manager.
3) Get a quote for insurance, including verifying annual property taxes.
4) Get a home inspection.
5) Hire someone to take photos or video to see the specific condition of the premises.
If all this due diligence work has been performed and the numbers still look great, then close the deal and start making your repairs so you can rent the property out as soon as possible.
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