Good Buy or Goodbye?!

Tips to shopping for foreclosed, short-sale and flipped homes

It has a mountain out back and, apparently, a mountain of debt.

Weeds and overgrown landscaping obscure a for-sale sign in the front of the foreclosed home northwest of Deer Valley and Cave Creek roads in north Phoenix.


"This one is not too bad," real-estate agent Gary Holloway of Zip Realty said of the long-vacant home. "They get no love."

The four-bedroom house, built in 2006 by Courtland Homes, is missing a dishwasher, refrigerator and built-in microwave oven. It also has some quarter-size holes in the kitchen wall. Otherwise, it appears to be in reasonably good condition.

The foreclosed home in the Eagle Bluff subdivision needs appliances, new carpeting and paint at a cost of at least $15,000. The two-story 3,182-square-foot home has a good view of one of the unnamed Union Hills beyond the back wall.

And it could be a good buy for a cautious buyer who knows what to look for in a foreclosure.

Listed at $210,000, the home was in escrow and could become yet another of the thousands of foreclosed Valley homes that buyers have acquired from banks.

Arizona had 21,442 foreclosed homes in the first quarter of this year, according to RealtyTrac.

The state has the nation's second-highest foreclosure rate behind Nevada, with one in every 49 homes with a mortgage receiving a foreclosure filing in the first quarter, according to RealtyTrac. That's triple the U.S. average.

Just fewer than half of Phoenix's 5,183 home sales in the first quarter were foreclosures, Zip Realty reported.

Buyers of foreclosed homes can save tens of thousands of dollars on the purchase price. But real-estate agents warn of pitfalls.

Jeff Barker of Diamondback Realty in Scottsdale said buyers must rely on a home inspection to protect themselves when buying a foreclosed home.

No disclosure of missing appliances or damage is required at the trustee sale of a foreclosed property.

"You've got to do your due diligence," he said. "And hire a good real-estate agent."

Buyers often make a big mistake in underestimating the cost to remodel a foreclosed home, said Barker, who has listed about 75 homes for banks.


Learn home market

Ron Bernier, a broker with Zip Realty, said buyers can better understand the market value of a property by driving past it and seeing conditions in the neighborhood.

Buyers can expect to be bidding against others for foreclosed homes in the lower price ranges. Plus, deals often fall apart when a property does not appraise at a high enough price to satisfy the new lender.

Holloway of Zip Realty said buyers might also consider buying a previously foreclosed home that an investor already has remodeled, what's known as a fix-and-flip property.

The traditional resale market is struggling to compete on price with the distressed properties and fix-and-flip homes, he said.

To reveal market options, Holloway visited the Eagle Bluff neighborhood to show the foreclosed home mentioned earlier, as well as a similar short-sale home and fix-and-flip home.


Deal or no deal

The short-sale home, slightly smaller than the other two, was listed at $240,000.

It was in better shape than the foreclosed home, with nice cabinets and light fixtures in an upstairs office. But simulated-wood flooring had been poorly installed, and most buyers would likely choose to repaint the home's neon-colored bedrooms.

Holloway also warned that a short-sale price is not "real" until a bank accepts an offer from several bidders.

"Don't fall in love with it, because it's not real until you own it," he said of a short-sale home.

The same goes for foreclosed properties. Holloway advises clients to keep looking because distressed-property deals often take a long time to complete and can fall apart completely.


Home shows well

The fix-and-flip home he showed was nicely staged.

"Investors know the drill," Holloway said. "It's like a model home. They even installed a new doorbell and coach light at the front door."

Inside, new granite countertops, back splash and cabinets had been installed, along with new tile, carpeting and kitchen appliances. It comes with a home warranty.

The house listed at $270,000, but the investor had agreed to a price of $265,000 before a buyer got cold feet.

At $265,000, the investor stands to make about $15,000 in profit, Holloway said. The previously foreclosed home sold for $195,000 and the investor spent about $35,000 on remodeling it. The investor also will spend about $20,000 to market the home and pay closing costs and commissions.

The extra cost of the fix-and-flip over the foreclosed property might be a better deal for someone wanting a home that's move-in ready.

However, Barker of Diamondback Realty warned that buyers should be careful with fix-and-flip homes because sometimes the remodeling is cosmetic, with cheap carpet, paint and generic appliances.



Read more: http://www.azcentral.com/business/realestate/articles/2010/04/23/20100423how-to-buy-foreclosure0424.html#ixzz0o71PVKdP

5 Great Tips 4 Real Estate Investors!

Investing in real estate is one of the most attractive ways available to most people to set themselves up financially for life. Moreover, real this can be done by almost anyone by starting with one property and building up slowly and safely.

A lot of people practice property investing as their core profession and, in fact, can make a lot of money that way.

Real estate investing is really an art and, like any art, it takes time to master. The key, of course, is to buy at a lower price and sell at higher price and make a profit even after paying all the costs involved in the two (buy/sell) transactions. Although another way is to buy and hold property over the long term. Generally, people are of the opinion that investing makes sense only when the values are on the rise. However, real investing for profits is possible just about any time (and as I just said, real estate investing is an art). Here is a list of tips that can make investing in property profitable for you:

1) Look for public auctions, divorce settlements and foreclosures (bank/FHA/VA): Since quick settlement is the preference here (and not price), you might get a property at a price that is much lower than the prevailing market rate. You can then make arrangements to sell it at the market rate over a short period of time. However, make sure that the property is worth the price you are paying.

2) Looking for old listings: The old listings that are still unsold may provide you with good real estate investing opportunities. Just get hold of an old newspaper and call up the sellers. They might have given up hope of selling that property at all and with a bit of negotiation you can get the property for a real low price.

3) The hidden treasure: A really old (and dirty) looking house may scare off buyers. But this might be your chance to buy at a discount that can yield good profits. So, explore such properties and check if spending a bit on them can make them shine. You can get these at very low prices and make a big profit in a short time.

4) Team up with attorneys: There are a number of attorneys who handle property sales on behalf of sellers or in special circumstances (like the death of the property owner). They might sometimes be looking to dispose off the property rather quickly and hence at a low price. Be the first one to grab such real estate investing opportunities and enjoy the profits.

5) Keep tab on the newspaper announcements: Property sell offs due to deaths, divorce settlements, immediate cash requirements and other reason are frequently announced in local papers. Keep track of such real estate investing avenues.

Using the above tips you could pick up property at a discount and onsell for a profit or you could rent out the properties and use the rent to boost yor income. If you do this enough times you could even retire and live off the rents.