| WHAT
YOU SEE IS WHAT YOU GET!
So,
you want to buy a home in foreclosure? You've checked
all of the liens, taxes due, and sales comps. You've driven
by the property, studied the neighborhood, spoken with
the trustee, and verified if there are any IRS or state
tax liens against the Trustor/owner. But, there's one
more thing to check out...the inside of the house.
There's
only one complication, you can't get in! The owner/tenant
is unfriendly or hostile and won't let you come inside
the house. Perhaps the home is vacant, but you still can't
peek in the windows since the curtains are drawn closed.
So what should you do?
As
a general rule of thumb, what you see on the outside,
is what you'll get on the inside. In other words, if the
property is in disrepair outside, it will very likely
be in the same condition inside. If it needs paint, a
new roof, structural repairs or replacements (e.g. shutters,
windows, garage door, fence, etc.), or landscaping; you
can bet it will also need new carpet, vinyl or tile flooring,
kitchen cabinet repairs, counter tops, bathroom tile and
fixture repairs or replacements, some new doors, appliance
replacement(s), drapes or blinds, and a few wall patches.
Sound
familiar?
On
the other hand, let's say the landscaping looks good (freshly
groomed), the paint isn't bad or chipped, but the house
just looks tired, or like it hasn't been remodeled in
at least 20 years. In this case, there is probably (still)
some pride of ownership and the inside will be clean and
well maintained; but also tired, or dated looking. A little
paint, new carpet, drapes or blinds, minor repairs, and
maybe even a new counter top will be all that is needed.
That is if you want to maximize your resale value and
sell it for the market value of a home in good condition.
So,
how do you know what the condition is inside? What should
you do if you can't get inside to verify the actual condition?
Here
are a few ideas that might help:
- Knock
on the door and try to gain rapport with the owner or
tenant, by seeing if there is anything you can do to
help them. Eventually, see if you can get in, for coffee
or just to sit more comfortably.
- Tell
the owner/tenant that you want to buy their house before
it goes to foreclosure, but you need to do an inspection
before you can make them an offer.
- Tell
the owner/tenant that you are willing to pay them whatever
the full market value of the house is, in cash and close
before the foreclosure deadline, but you need to first
get a look around. Afterward, you can gracefully bow
out.
- Tell
the owner/tenant you want to buy the property and offer
them $50.00 if they will let you take a quick look inside.
- Tell
the owner/tenant that you plan on bidding on the property
at the upcoming auction, and that you hope to be the
successful bidder. If you purchase the property you
would be willing to pay them $1,000.00 in moving costs
and even let them stay in the house for a month until
they can find a suitable place to move.
- Try
to peek in the windows (but be sure no one is home...ring
and knock first, and bring a friend for backup).
- Talk
to the neighbors on either side and see if they know,
or if they have been inside the home recently.
- Try
to find out why the property went into foreclosure.
If it was a hostile situation, they may have vengefully
destroyed the interior.
Check the MLS for any history of listings on the property
in the last 5 years. There may be comments on the condition.
- Check
the city building department and verify if there have
been any recent building permits.
- Check
with the police to determine if there have been any
major crimes at this address, or on the street recently.
- Ask
the neighbors if they have seen any police, fire engines
or ambulances at the house.
- Estimate
the outside repair costs, then double it to cover for
possible inside repairs.
- Budget
10% of the fixed market value of the property for repairs.
Remember
that everyone undergoing foreclosure, is experiencing
tremendous distress. They most likely are down on their
luck or out of a job. They don't trust the system, the
bank/lender or anyone trying to steal their property away
from them. They are optimistic that they will find a solution
and they will "find" the money. The odds of
winning the lottery, or money falling out of the sky are
very low and so is their chance of resolving their problem
in time. You need to determine which approach works best
for you and your personal style. But remember, you must
look and sound like you are their answer (their white
knight) to resolving this terrible situation. You must
gain their trust, or pay for it!
Shark
Bait - The foreclosure buyers' software, will help you
go through a comprehensive evaluation process. With its
built-in step-by-step checklist, you will be sure that
you have verified everything before you make any offers
on a foreclosure property. Shark Bait's "Bid Info"
form will help you analyze the cost of repairs, market
value after the repairs are made, sales costs, resale
commissions, your maximum breakeven bid amount, and your
cash-on-cash return on investment. Keep all of your notes
together and even photos of the property for quick reference
for every property in the system. Let Shark Bait help
you find the hidden equity in any foreclosure property,
and then help you make certain there are no surprises!
Whether
you use Shark Bait, or just paper lists and notices out
of your legal newspaper and your own research at the County
Recorders office, you need to proceed cautiously and diligently.
Develop a degree of expertise on the cost of repairs.
Get a contractor to help you estimate the costs for a
specific house, or in general for any house of a certain
size for each of the typical repair items. Visit your
local home improvement store (Home Depot, Lowes, etc.)
and talk with each departments sales help for advice and
estimates for each type of repair. A don't forget to keep
a contingency.
We
hope this tip was helpful in your foreclosure buying efforts.
Please visit us at http://www.digitaldeal.com and take
our free tour of the Shark Bait software.
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