Are US Foreclosed Homes Safe To Buy?

The word foreclosure is not normally associated with opportunity. But for property investors in the know, instead of being a word that inspires dread, the word "foreclosure"actually creates a rush of excitement.

Banks are not interested in having property portfolios and instead simply want to recover their money when they foreclose a home. As a result, banks want to sell these properties quickly and you can often pick them up at bargain prices.

The US property market is already depressed and the even lower prices of foreclosed homes offer investors extremely attractive opportunities. In fact, homes often go for between 30% and 75% off of market high prices.

But are all foreclosed homes good value? My short answer is a resounding "no"!

Inexperienced buyers can quickly fall foul of some unique dangers that lurk in the US property market. Hidden costs such as liens from unpaid taxes, huge renovation bills from destructive former tenants, and even complex property scams, all offer a quick recipe for financial disaster. 

Getting some experienced help can enable you to avoid many of these pitfalls. The internet may be a great starting point to get a feel for what your money can buy, but nothing beats solid advice from those already on the ground. A few on screen images are not going to give you the whole story and you should never buy US property without actually seeing the neighbourhood and property first hand.

Because banks want to dispose of their properties quickly, they often engage the services of specialist agents who can find buyers fast. These agents focus their activities on these "recently bank owned" properties and can offer good advice on what to buy.

Be aware that any unpaid taxes still on the property will be inherited by you when you purchase it. Some cheap properties are cheap for that very reason. Again, it is importantto have someone who can do a little digging and check out the property beforehand will make sure you don’t end up buying three bedrooms and a big pile of debt.

A good advisor should also be able to tip you off on short sales. These allow you to approach a property owner whose bank is threatening foreclosurewith an offer to buy the property at an agreed amount.The bank thus knows it can liquidate the property quickly, giving you the chance to get a property at a cheaper rate and lock out any competition to buy that home.

There is no denying that foreclosed properties offer great opportunities for Australian investors, but it’s important that you are careful with your selection. The last thing you want to buy is a money pit, so make your choices wisely.

Matt Dunne is the director of House Buyers USA, a company that has almost 10 years experience in helping people find great properties in the US. Not only can House Buyers USA assist you in finding good real estate opportunities, but Matt’s team can also arrange for financing, legal assistance, renovations, property managers and extensive research to ensure your purchases are safe and hassle free.

Sign up for the House Buyers USA newsletter  to receive more details, as well as free SMSF e-book entitled Controlling Tomorrow Today.


The above information is supplied by House Buyers USA.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.

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