Best Way To Find Foreclosures

Should I Buy A Foreclosed Home In Georgia

Buyers everywhere should approach foreclosures with caution, but Georgia is a particularly good state for going that route if you choose it. Rapid growth and high delinquency rates in areas like Atlanta increase the chances of finding a good deal andgetting a solid return on investment â regardless of whether you flip, rent, or occupy it.

The fact that Georgia is a non-judicial state and has no redemption period also makes the process of buying foreclosed homes much more manageable.

That said, we recommend sticking to pre-foreclosures or REOs if you’re not a seasoned flipper or investor. For these stages of foreclosure, property inspections and appraisals are allowed, which helps buyers who aren’t experienced with real estateto avoid major pitfalls.

If you decide to buy a foreclosure, consider working with an experienced agent who can help you get the first crack at great opportunities and avoid money pits. Talk to one of Clever’s recommended agentstosee how they can help you find your next home!

How Much Can I Afford

If you want to finance a foreclosure with a mortgage, youll need to analyze your income and expenses to determine how much house you can afford.

Lenders will look at the ratio of your pre-tax income to your other debts and financial obligations like credit cards, student loans, auto loans, alimony and child support. Theyll want your monthly house payment , plus your monthly payments on these other obligations to total no more than 50% of your pre-tax income, and thats only if you have excellent credit. However, most lenders will look for your debt-to-income ratio to be less than 36% when underwriting a mortgage.

Also add up your other expenses, including taxes, HOA fees, health insurance, transportation, utility bills, groceries, pet care and child care. Consider how much you want to save for home repairs and upgrades, emergencies, and retirement, as well as how much you want to spend on entertainment and travel. Then youll know what youre comfortable spending on a home, not just what a lender will qualify you to borrow.

How To Find Foreclosed Properties For Sale

Now that you know what foreclosed properties are and how they are a good investment opportunity, you might think about finding such properties. These properties arent the usual properties, so you need to know how to find such properties. Below are the primary ways that you can use to find and buy foreclosed properties.

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How To Find Foreclosed Homes

Think back to the collapse of the housing market of a decade ago, when borrowers defaulted on subprime mortgages in high numbers, and millions of homes went into foreclosure as a result. Foreclosures and short sales flooded the market.

But those days are over, at least for now. Charlie says theres tough competition for what few properties remain on the foreclosure market nowadays. And youll need cash, or you risk losing to investors who can come up with the funds quicker.

Pre-COVID, the economy was very strong, and you were lucky to find a short sale or a bank-owned foreclosure, Charlie says. Not saying they didnt exist, they did, but they were harder to come by.

Finding foreclosures may be a little more challenging in strong real estate markets, but its possible. You can start by sifting websites that now specialize in homes and properties in foreclosure, like Fannie Maes HomePath.com. Some banks, such as Bank of America, have online databases that can also help you search for a foreclosed home.

Leveraging a real estate agent is going to be your best bet for finding foreclosed homes. A real estate agent will be able to find foreclosure property listings for you on the Multiple Listing Service a database of real estate listings that consumers cant access directly.

Tour Foreclosures In Person

A huge benefit to buying pre-foreclosures or REOs is that you can tour the property before making an offer . If you’re new to renovating and rehabbing properties, make an effort to see a propertyin person before submitting an offer. You might not be permitted to, but it never hurts to ask.

While you may not have time to order an inspection, you can at least bring a contractor to tour the home with you. You’ll get a sense of any major flaws with the property â and what they’ll cost to fix. If your goal is to flip the house,this is crucial for determining your after repair value .

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The Bottom Line: Is Buying A Foreclosed Home Right For You

Buying a foreclosure can be a unique opportunity for homebuyers looking to pay lower prices or below market value or for complete home restoration projects. Keep in mind that many foreclosed homes could have severe damage and structural issues, and are usually sold as-is.

Get in contact with an experienced real estate agent if you want to take a risk on a foreclosure. Your real estate agent will help guide you through the foreclosure process, because most lenders dont sell to individual buyers.

Once you find a home youre interested in, get an appraisal and property inspection completed. Youll also need to secure funding with a mortgage preapproval. Follow up with your lender and agent to finalize the sale once the results of your inspection look acceptable.

If youre ready to get a mortgage approval, get started online!

Find a local pro.

Get A Preapproval Letter

While some foreclosures may require you to pay cash or take out a hard money loan , others do allow mortgage financing.

Mortgage preapproval requires the lender to review the borrowers credit history and financial documents, such as tax returns, W-2s, 1099s and bank statements to see how much they qualify to borrow. If youre buying a bank-owned home, getting a mortgage preapproval letter may help you compete with the all-cash buyers who often purchase foreclosures.

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Renovate Repair And Move Into The Home

Once you finalize the logistics to buy a foreclosure, its time for the work to begin. Many foreclosed properties require extensive repairs to get up to code as the previous homeowners typically leave a few presents for the institution that foreclosed on them. Plus, many foreclosed homes sit empty for a long period of time because of either their condition or because of how slow the bank is at moving forward with a new buyer.

The work that needs to be done can range from electrical upgrades and plumbing repairs to full-scale roof replacements and foundation work. Your inspection should uncover most of the work that needs to be done. Once youre finished with fixing up your foreclosed home, its time to move in.

Find A Knowledgeable Foreclosure Agent

If you’re thinking about buying a foreclosed home, choose your real estate agent carefully.

“An agent who knows how the process of buying a foreclosed property works will be very helpful,” says Santosh Bhatt, a broker at Greater Louisville Homes in Kentucky. “Understanding the process allows the agent to manage buyer expectations. An agent with a lack of foreclosure experience can make the transaction a bit challenging.”

Look for agents in areas with high foreclosure rates or ask your lender if they partner with any REO agents. It can also be helpful to search for agents with Short Sales and Foreclosure Resource or Certified Distressed Property Expert certifications.

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How To Find Short Sales & Foreclosures Near You

The real estate industry is ripe with properties that are considered to be profitable for investors to rehab and flip. However, none may be more appealing than foreclosures and short sales. These are the properties investors must approach proactively. Doing so, unfortunately, is easier said than done. On average, short sales and foreclosures sell for approximately 30 percent less than a non-distressed property. Therefore, they are a priority for every investor, including your competition. Everyone in your market will be vying for these properties, as they offer some of the highest ROI .

You must approach distressed properties with a proactive plan. Unbeknownst to many, there are actually steps you can take to give yourself an advantage when locating and tracking down these homes. Establishing a working rapport with the appropriate people may actually land you the home of your dreams at the best possible price. Whether you are working with other investors or posting up on the courthouse steps, you can land a good deal before everyone else even knows it is available. The following illustrates 5 simple ways an investor can find foreclosures and short sales before everyone else:

Prospecting Letters For Preforeclosure Listings

In the digital communication world, there are endless ways to contact investment leads and homeowners in foreclosure. Writing letters can seem like a boring, tedious, or old-fashioned way to make contact, but it can actually be a particularly effective strategy for foreclosures. Since the recipients are not in their situation by choice, they should be approached with sensitivity and compassion, which is very difficult to do through online ads or messages.

Sample preforeclosure letter

Letters, on the other hand, can be personalized and handwritten in order to make the biggest impact. Write your prospecting letter from a template, but include personalized details about their neighborhood, local hot spots, or their interests if you are familiar with them. Keep the focus on communicating how you can benefit the owners as much as possible.

Read more information about how to create and distribute real estate prospecting letters, and download a free preforeclosure template from our article: 9 Real Estate Prospecting Letter Templates for Lead Outreach.

To further simplify the process, consider using a direct mail service like ProspectsPLUS! for the execution of your prospecting letters, like designing, printing, and even mailing. ProspectsPLUS! offers multiple resources and strategies for distributing your letters and direct mail, including EDDM and the Market Dominator direct mail strategy. Start looking through ProspectsPLUS! templates and mailing options for free.

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Risks And Rewards Of Buying A Foreclosed Home

The amount of risk and potential reward of buying a foreclosed home can vary depending on which part of the foreclosure process the home is in.

First, lets cover some of the risks of investing in a foreclosed home:

• Theres a lot of competition to buy a foreclosure. Real estate investors, for instance, often bid cash for a foreclosed home to operate as an income property with no contingencies and no questions asked.
• The condition of a foreclosure home isnt disclosed or guaranteed. Unlike buying a home listed on the MLS by a real estate agent, the bank isnt required to disclose anything about the property to a buyer. Thats why its important to learn as much as possible about the house before you bid.
• Buying a foreclosed home doesnt always make sense. Just because a home is being sold at a foreclosure auction doesnt necessarily mean its a good deal. Some foreclosure homes have been completely trashed by the previous owner and require major repairs like new roofs or heating and air conditioning systems.

However, theres an upside to everything. Some of the rewards of buying a foreclosed home include:

How To Find Foreclosures For Sale

Home flippers and ambitious homebuyers are often on the hunt for foreclosures, but it turns out that these types of homes can be a bit trickier to find than you might think. Finding foreclosures for sale requires a bit of research, a bit of action, and a bit of luck, all of which must come together at the same time .

Below, well go over different ways to find foreclosures for sale, plus a few tips for making sure you get the best deal possible on your fixer upper.

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Hire A Top Georgia Realtor With Foreclosure Expertise

Buying a foreclosed home in Georgia can be a complicated process. That’s why hiring an agent with experience buying foreclosures can make all the difference â they can help you navigate the additional risks, negotiate with motivated sellers,and avoid missing important deadlines.

It’s possible that your agent will have a relationship with REO departments of local lenders or other entities who deal with foreclosed homes. Having the inside track could lead you to a great deal.

If you need help finding a realtor who specializes in foreclosures, Clever will match you with an experienced local agent who can help you find the right property. You can also get cash back when you close on your Georgia property.

Requesting agent matches is a free, no-obligation process. Simply fill out the form below to get agent recommendations sent straight to your inbox!

Search Through Public Records

Off market properties for sale are found on public records. Aside from easy access, the records are free to anyone who would like to search for data from them. You can even hire someone to do it for you. But what data should you look for?

The public records should have the following information:

• Notice of Default letters issued within the neighborhood
• Lis Pendens, an official document notifying the public that a lawsuit concerning a claim on the property has been filed
• Notice of Sales
• Name and address of the owner
• The amount owed on the property

One advantage of using this method is ensuring that the information you find is up-to-date. Unfortunately, public records have limitations, too. You will not see the propertyâs description or photos on the public records. But you will have less competition because there are not as many investors who use this method as those who go to websites or team up with real estate agents.

When you go into this method, you must be prepared for the tedious process of searching through all the data, and if your county has not invested in technology, you may have to visit your countyâs courthouse to retrieve the information you need.

This approach is ideal for seasoned investors with the time and the patience to comb through public records and the knowledge to locate and identify a good-for-profit pre foreclosure property.

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What Are Short Sale Homes And Foreclosure Properties

Short sale properties are homes sold to a third party for less than the amount owed by the homeowner. Although unfortunate, short sales provide homeowners under some financial hardship with an alternative to foreclosure. However, the lender must agree to absorb the loss caused by a short sale, usually incentivized to avoid the costly foreclosure process. On the other hand, foreclosures are homes that are being forced to sell by the lender to recoup any potential losses.

Georgia Foreclosure Laws For Buyers

Georgia has favorable legal proceedings for buyers of foreclosures. Since most foreclosures are non-judicial â meaning the lender does not have to sue the borrower in court and have a judge rule to foreclose â the process is significantlyeasier and faster than in judicial states.

There’s no redemption period for Georgia foreclosures either, which means there’s no risk of a previous owner reclaiming the property after you close on your purchase. That said, you still need to run a title check to ensure no one else has a legitimateclaim to that property, no matter what stage of foreclosure the property is in.

Since deficiency judgments are allowed with foreclosed properties in Georgia, there’s a possibility that you could acquire a property for less than the current debt against it â also called a short sale. If you’re buying a short saleproperty, you’ll likely need to deal directly with the lender and get their approval.

Occasionally, lenders will allow you to assume the current loan on the property, which means you’ll be responsible only for whatever is still owed. Consult the seller and lender directly if you want to explore this possibility.

Georgia foreclosure buyers should also keep tenant protection laws in mind. If you intend to live in the property â also called owner occupying â you need to allow current tenants 90 days to vacate the property. If you intend to rent out theproperty, you must honor the terms of the lease for the current tenants.

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Review Your Appraisal And Home Inspection Carefully

Once your offer has been accepted, you’ll proceed to the next two hurdles: the home appraisal and inspection.

Unless you’re paying in cash, your lender will require an appraisal to ensure the home’s value aligns with your offer. If you’re paying in cash, you might consider ordering an appraisal to ensure the property you’re buying is worth its selling price.

Even more important, though, is the home inspection. As a buyer, it’s your responsibility to order a home inspection — this step is critical with a foreclosure. You’ll want to know about every potential issue because there’s a strong chance you’ll have to buy it as-is.

“Many banks and HUD will sell properties ‘as-is’ and will make no repairs after the sale,” says Bhatt. “But some banks will consider repairs after inspection and more so after appraisal, especially if they are lender-required repairs.”

Review your inspection results carefully to decide if the issues found are worth the discount you’re receiving on buying a foreclosure. Attempt to negotiate repairs for anything major, but be prepared to walk away if the damage is too extensive.

Foreclosure Listings Government Sites

HUD.gov. Potential investors and other home buyers can find one- to four-unit residential properties that the Department of Housing and Urban Development acquired from foreclosure actions on FHA-insured mortgages.

USDA-RD/FSA Properties. The United State Department of Agriculture-Rural Development and the USDA-Farm Service Agency list properties on this website. Here, youll find a small number of single- and multi-family homes, farms, and ranches.Buyers should contact the local USDA-RD office for more information on the property and how to buy it.

IRS Seizures. This Internal Revenue Service website is a portal to finding homes and other property seized by the tax agency for nonpayment of federal taxes.

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