Foreclosure properties for purchase have become scarce during the COVID-19 pandemic. Investing has been more challenging but you can still keep making money on foreclosures this year. Below are some tips on how to get started.
- Find properties that are in preforeclosure.
With the success of the vaccine rollout, it is unlikely that the protections coming from the federal and state foreclosure moratorium and COVID-19 mortgage forbearance will last throughout the year. Your job now is to find properties that are in preforeclosure so you can buy it early in the process.
A good relationship with quality real estate agents helps you out here. Those who have insider knowledge can help you find properties in preforeclosure. Other ways to look for these properties include browsing bank, county, and government websites, attending live and online auctions, and simply checking out real estate signages when you are driving or traveling.
- Get a preapproval letter.
It pays to get pre-approved for a mortgage before even searching for a foreclosed property. After the verification process, the lender will send you a pre-approval letter and this signals to sellers that you are serious about purchasing foreclosure properties. This particularly helps when multiple buyers are bidding on one property. Your pre-approval for a mortgage gives you leverage, especially over other bidders who have not been pre-approved yet.
- Compare properties.
Whether you plan to flip or rent the property after purchasing, it is smart to look at comparable properties near your target foreclosure. Do not just buy the first foreclosed home that you see. Write a criteria that works with your budget and assess several properties to avoid any pitfalls. Comparing the potential of three properties is enough to help you come up with an informed decision.
- Bid higher.
Foreclosure inventory is low. They come off the market almost as soon as they are put out. Bid a little higher to get the home that you want. Foreclosed homes are already below market value and sellers do not want to go any lower on the price. Offering a ridiculously low price will ensure you will lose to a higher bidding investor. Remember, you have to buy the foreclosure first before you can make more money off of it!