As Dallas/Fort Worth's foreclosures continue to rise (see article, "Foreclosures Rise in Most Areas" ), NOW is the perfect time for investors to look for investment properties to add to their portfolio.
As homeowners strapped with sub-prime mortgages lose their homes to foreclosure, the real estate market is feeling the effects of market change. While these factors can be viewed as being a negative, we can look at the "flip side" to find the positives.
Many prospective homeowners and investors can find that many foreclosured properties are listed at "below market" value. Also, as the foreclosures continue to rise in Dallas/Fort Worth, homeowners will need to have a place to live (see article, "Apartment Owners See Slowdown's Silver Lining").
Benefits of Working with Foreclosure Specialists
The Visions Realty & Investments, Inc. Foreclosure Team will do the initial "leg-work" of identifying properties that fit your investment criteria. Because many banks will not work with individuals without representation, we will assist with the paperwork and negotiations involved in purchasing a foreclosure. Our team will also help you find the best lender and inspector to help you complete the transaction.
Three Types of Foreclosure Purchase When purchasing a Foreclosure, the Buyer has the following choices when "holding" the property:
- Owner Occupied
- Owner is local and chooses to purchase and live in the property after closing
- Buy/Rent/Hold
- Owner is Investor and chooses to purchase the property and then make the necessary improvements to make it ready for lease. The property is then rented by the Seller or through a Property Management Company. or the best return on the Investment, the Investor should hold the property for at least 5 years.
- "Flip" Property
- Owner is Investor and chooses to purchase the property with the intent to make the necessary improvements on the property and then put it back on the market to sell at a profit. Generally, the "hold" period on this type of investment is 6-8 months.
Due to the nature of Foreclosure transaction, please be aware that the following steps must be taken in order to start the process. Because the Foreclosure market is a hot commodity, you must submit your information as quickly as possible.
- Buyer must provide a pre-qualification letter, proof of funds (for cash offers) or a bank letter with the initial offer.
- Buyer must use the standard Texas promulgated contracts for the purchase. No assigns or pass-throughs are permitted.
- Earnest Money deposit is to be a minimum of $1,000 or 1% of offer price (whichever amount is higher).
- The Option/Inspection period is to be 7 days. Power, water and gas may not be on due to safety issues. Option fee is not necessary.
- The Seller will not make any repairs. The property is to be sold as is.
- Closing should be set for 30 days from the effective date of the contract. The Seller may require late closing penalty fees if the property does not close on time.
- All required addenda must accompany all offers submitted to the Seller. Additional Addenda will be provided by the Seller after contract negotiations.
- Seller will consider offers on weekdays only and may not respond immediately.
- The Seller will only close at the Title Company of their choice.
- The Seller is exempt from providing a Seller's Property Condition Disclosure due to foreclosure status.
- Seller will not provide a survey. If the Buyer requires a survey of the property, it will be at the Buyer's expense.
- The Deed shall be conveyed by Special Warranty Deed or by the local equivalent.
- The Seller retains the right to consider multiple offers simultaneously. Acceptance of an offer is signified by the execution of the contract by the Seller.
