How To Find Foreclosures in Your Neighborhood Print
Written by Larry Goins   
Monday, 01 March 2010 19:23

Top Tips on How You Can Find Foreclosures in Your Back Yard

The real estate investment market is ever growing as a place where investors are trying to cash in on great deals and investment opportunities that will eventually pay off as lucrative investments. While many investors turn to rental properties, still others have become involved in the world of wholesaling and flipping houses. With the right advice and a little help from other investors and real estate agents, flipping houses can be an extremely lucrative business. Even if an investor only starts off small spending a few minutes or few hours a day searching for homes and then putting time into repairing that home, this can pay off with a large output of cash. 

While there are many excellent opportunities for homes for sale to flip on the market, these homes may be flooded by offers from real estate investors and may be difficult to compete with when first getting into the flipping business. An unsuspecting place to begin the investment search is in foreclosures. Basically, foreclosures are homes that have been seized by lenders or government agencies, such as Housing and Urban Development (HUD), because a homeowner was unable to make loan payments, tax payments or insurance payments on the home. From here the lender or government agencies will hold a special auction or a special bidding session where potential buyers and investors can try to purchase that property. 

The best bet when becoming involved in foreclosures is to find a real estate agent or broker who you enjoy working with. Although some foreclosure processes will allow for an individual investor to go in and purchase the property, others will require an agent who is knowledgeable about the business to be present at an auction or bid closing. Most real estate agents will also be able to tell you the best places to begin searching for foreclosures, as they are not always available on the main realtor websites in the area. 

When deciding to search for foreclosures, it is also important to find a home inspector who you trust to tell you the honest truth. Many investors who regularly purchase foreclosed homes will tell you that the best option for foreclosures is to have an investor inspect the house before placing a bid on the home. Remember that foreclosures are sold “as is” meaning no repairs will be made by the lender or government agency selling the home and a homeowner is no longer in the house to make repairs to that home before closing. Once you have already placed a bid on the home, it may be too late, as you may be stuck with a real money pit that could take more than your budget allows to fix it up. So be sure to have the home inspected before beginning the bidding contract part of business.

While it is helpful to have a real estate agent help with finding foreclosures and seized properties, this should not stop an investor from searching on their own. If you work a full-time job elsewhere and do not have the time or energy to invest in searching for foreclosed homes, you may want to consider making friends with real estate investment scouts. Often times scouts are investors who will search for houses, put an initial contract down on the house and then sell the contract to an investor who want to spend the time and money fixing up the house. The investing scout will simply make a few thousand dollars with the difference in contract prices, but the real money is left up to the flipping investor, who can make thousands of dollars on a home that was way below market value, simply by shaping up the house.

Other great places to independently look for foreclosures are in county court records for divorce hearings, family estate hearings, and bankruptcy hearings. Often a notice of a foreclosed house will be made available with that legal information. From here you can contact the county to find out where the house is located or when an auction will be held to sell the foreclosed property. You may also want to do your own personal searches with places like the Fannie Mae Foundation, the IRS who often lists foreclosed real estate for sale, as well as the Veteran’s Administration who lists VA homes that have been seized.

Once you have determined that you will invest in foreclosures and have begun looking for foreclosed houses, before placing a bid on a home or even asking for an inspection, it is best to know exactly what your budget. If you are willing to spend $100,000 total on a home, including repairs, then you will need to look for homes that are selling for $70,000 but will need no more than $25,000-$30,000 worth of repairs.

Remember that when considering how much you will spend on the home overall, you will also want to consider how much of a profit you will make once the home sells. This will require getting together with your real estate agent to do a market analysis of the area and determine exactly what well-maintained homes sell for in the area.