Hi. I’ve been thinking about buying a foreclosed property. I would be looking to fix it up a little bit and then sell it. Are investors able to negotiate at all with the bank? What other questions should I be considering? Any advice would be greatly appreciated.
The answer to this question depends on where in the process the foreclosure is.
If the current owner is behind in payments, depending on the property value vs loan balance, you may be able to negotiate a short sale offer with the current lender. If the property is worth more than the loan balance, you’d be negotiating with the owner.
Once a foreclosure action is filed, then you can negotiate with the bank, but don’t expect an easy process.
If the property has already been foreclosed on, then the bank owns it, and will negotiate.
Make sure you know how much the property is worth. If it goes all the way to auction and the bank ends up with it, it’s probably worth way less than the mortgage that got defaulted on.
Just remember, buying a foreclosure is just like buying any other property to flip:
1. Know your ARV
2. Know your rehab and carrying costs
3. Make sure your purchase plus rehab cost is less than 70% of ARV
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