The prominent availability of foreclosures in this down real estate market has many housing speculators salivating at the prospect of turning a profit. Investors and flippers alike see opportunity in the endless listings of competitively priced, distressed properties. It’s true, that investing in foreclosed properties can be a ripe opportunity for the savvy housing guru, but that doesn’t mean you can’t also get burned. Smart investors do their homework on If you work in real estate or have been contemplating the possibility of dipping a toe into the market for distressed properties, you must remember these three considerations:

Physical Condition

Houses for sale and condos for sale vary greatly in physical condition. Repossessed properties in particular have a reputation for hiding fatal structural flaws. People losing their homes have a nasty habit of taking integral pieces of the house with them, leaving you the investor with a hollow shell of a building. Avoid these pitfalls by visiting the site. You should never purchase property site unseen.

Legal Hang-ups

If the prior resident was really in hot financial water – a distinct possibility – the building may have secondary legal obligations attached. Always research the possibility that a bank or creditor may hold a lien or claim against the foreclosed home. Never enter into a real estate contract until you know the property’s baggage

Bargaining Position

Know how your market has been treating buyers and sellers. You may think you’ve found a great deal only to discover that you have no prospect of profiting on the flip because the market has moved. When you enter into any negotiation through  know your aspirational price and your reserve and never stray from them. In this market there may be a lot of real estate listings that look enticing – don’t be fooled. Always consider every listing relative to the ever-changing market.

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This is filed under Foreclosures.

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