We are witnessing a sustained increase in the number of foreclosure homes with rates of filing at about 50% in several states as of the middle of last year. One can see this development in different ways. This tragic loss to some can be a gain to others.
This is good news for real estate investors and home buyers. This condition opens a lot of opportunities than ever in making profit from bidding in real estate properties. However, there is a caveat in this kind of financial opportunity. Before you finally decide to offer a bid on a particular home, there are certain things that you need to know and things that need to be done.
How to Bid on a Home
1. Do you homework - Before placing a bid on a home, you need to be aware of the conditions in the market. This means that you must be able to get the fair market value of the real estate property you are interested in as well as the fair market values of same kind of real estate properties within the area. Your initial bid should be made on the basis of the market trends of similar real estate properties in the area. It would be wise to consider the sales trend for the last three months. Most buyers would place a bid that is about 10% lower than the asking price if similar real estate properties are sold at 5% lower than the asking price.
2. Get a Prequalification Letter - Serious bidders would be in a better position if they get a prequalification letter before offering a bid. This can be done conveniently via the internet or by going to the bank personally. The process is completed in a matter of minutes. With this particular requisite covered, home buyers and realtors will already have an idea on what real estate properties fall into their established price range. With the prequalification letter, home buyers are able to set the bidding limit as it would be a total waste time to be focusing on real properties that you cannot afford.
3. Consider the Details - Before making the bid offering, it is essential that you study the laws of the state governing real estate auctions. There are several states that will require payment of cash at the auction. Further, counties in the same state may even have different rules and regulations governing auctions.
4. Make a Thorough Inspection - It is highly recommended that you hire the services of a professional home inspector when checking out the real estate property. These professionals must have the technical experience in doing home surveys particularly in the area where the property is located. He should be able to point out the problem areas in the house that will require costly repairs in the future.
5. Get the Help of the Professionals - It would be a great help if the home buyer seeks the services of a professional agent. If possible, look for an exclusive buying agent so that you are assured that he will primarily consider your interest and provide useful tips during the bidding process.
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