Did you know you can pick distressed or BMV property at up to 30% off the market price? Buying these properties can be a great investment if you are ready to put into them the work required. Before you go out hunting for properties to buy, you should know that “repossession” does not always mean “bargain”. You should research well the area where you want to buy and check out other properties, just like you would when buying a new home.
How to Buy Repossessed Property
a) Investigate the property
Check the condition and location of the property. Inspect the house physically and check its walls, floors, windows, doors and amenities like heaters and water systems. Also, check whether the area where the property is located has a good drainage system and presence of social amenities like schools and parks. Properties that are in districts with good schools are bound to be a good investment. You should also find out about the security of the area.
b) Get a mortgage deal
Before you start looking for a repossessed property to buy, get pre-approved for a mortgage. This will help you know how much you can afford to offer for a property. In turn, you will avoid wasting time chasing properties out of your budget. Check the mortgage options of various lenders and find the ones suitable for you. Use the Internet to compare the mortgage rates of different lenders and talk with your financial advisor to know what you should do to get approved for.
c) Property will stay in the market
Even after accepting an offer, lenders may continue marketing the property. If this happens, there is a chance you will be gazumped and therefore, survey and legal fees will go down the tube. Therefore, it’s worth completing an offer as soon as possible. This further underscores the importance of getting pre-approved for a mortgage before starting to search for distressed properties.
d) Check the utilities
Another thing you should confirm with the property you want to buy is whether its utilities are still running. When you move in, you may realise some utilities such as electricity, gas and water may have been cut off. Most energy companies will switch back on the utilities for free when you contact them. However, you may have to pay some fees to get the phone lines reconnected.
e) Check for disappearing white goods
One of the potential downsides of buying property in auctions is that the owners may have stripped them of fixtures and fittings before leaving. The homes may therefore feel a bit unlived in and will often need a refurb. If this is the case, make sure the amount you are offering for the property goes hand in hand with its value. To determine the true cost of owning the property, consider your purchase price, closing costs, legal fees and cost of refurb.
One of the best real estate investment decisions you can make is buying repossessed properties. You can find good repossessed properties at way below their market value if you research well.