A foreclosed property is a good money-saving option for aspiring homeowners on a budget, as long as you know how to choose one.
Q: How do I choose a foreclosed home?
A: For people hoping to buy a home on a budget, one of the best options to consider is a foreclosed property due to its below-market-value price. On the other hand, the first instinct of many idealistic aspiring homeowners is to shy away from one because they’re sold as-is. This means when one purchases a foreclosed home, they take on the responsibility of repairing whatever wear and tear it has sustained over the years.
Still, there are ways to ensure that you end up with a foreclosed home that has the best potential, and this is especially useful for those who are looking to make a business out of buying and selling homes.
Find out where the inventory is
Start by consulting various banks, insurance companies, and companies founded under the Special Purpose Vehicle Act of 2002 to assist banks in moving their nonperforming assets. Aside from private companies, various government institutions also have inventories of foreclosures such as the Bangko Sentral ng Pilipinas (BSP), Social Services System (SSS), and Home Development Mutual Fund (Pag-IBIG). Online, there are real estate selling websites such as MyProperty.ph that also advertise foreclosed properties for sale.
Don’t do it on your own
If this is your first time buying a property much less a foreclosure, you will likely need all the help you can get, and this is where a seasoned real estate broker comes in. They will most likely have wisdom to offer if they have extensive experience in helping clients with buying foreclosed homes. It would also be helpful to enlist a real estate attorney who will help you navigate the legalities involved in property buying.
Choose an ideal location
You can skimp on the aesthetics and you can also overlook certain repair needs (to a certain extent) and these can be amended later on. But what you must never overlook is the property’s location, since it is the one thing you can never alter. “Location, location, location” did not become a famous real estate saying for nothing. Pick a city that is close to the places that you need easy access to constantly, like central business districts (CBDs) and public transportation. For safety purposes, check online for neighborhoods with virtually no problems with major flooding, as well as those that are far from fault lines. An added consideration for investors is a fast-growing neighborhood; if the place is seeing a lot of major positive changes, chances are properties in these areas will appreciate fast too.
Give the foreclosure a thorough inspection
Have you paid big money on anything second-hand and when you took it home and looked at it closely, it turns out to be damaged beyond repair? Imagine doing that with something that costs about 500 percent more. You’re spending a lot on the foreclosure, and it would be a shame if you got something that takes more than it gives in terms of time, money, and effort. Damages on the surface (leaky ceiling, rusty hinges, wall cracks, etc.) are to be expected and way easier to rectify, but be sure to look even deeper. Get professionals to inspect the home’s plumbing and wiring, and to find out if the property has any infestation. These are more costly to repair, so think carefully if you’re willing to buy the property despite these issues.
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