There are many advantages to purchasing a foreclosed property in Berks County. The first benefit is the discounted price. Foreclosed homes are not desirable for banks and other financial institutions. That's why they sell these properties at a discount.

You can, therefore, expect an excellent return on investment (ROI) on such properties. Once you spruce up the property a bit, you can put it back on the market. Purchasing a real estate-owned property (REO) can also provide excellent financing options.

Even so, getting your hands on a foreclosed home is not easy. It can be a long and difficult process with some hidden risks. Novice real estate investors could be lured into making expensive mistakes by the lucrative pricing of these properties.

There are a few mistakes you should avoid when investing in a foreclosed home that are outlined in this blog.

Not Assessing the Risks

A newcomer to real estate may be tempted by the pricing of foreclosed properties. There are some risks associated with these deals, however.

Typically, the financial institution or lender will give you the property "as is." This means you'll be responsible for repairing any damage or faults that exist.

In addition to defaulting on their mortgage payment, the previous owners might have also struggled to maintain their home. The new buyer could face increased costs for repairs and maintenance.

In addition, you may have to deal with hidden costs, such as liens and back taxes. The lender could ask you to pay transfer charges too.

It's vital to remember that buying a foreclosed home isn't as simple as bidding the highest price at an auction. You may need to wait months before the lender approves the deal and you can take possession of the property. 

Identifying and evaluating the risks depends on you. Make sure your needs can be met by a foreclosed property after considering the risks involved.

If you're looking for a new home as soon as possible, a REO property's slow buying process will not work for you. However, if you want to get a good bargain by flipping and reselling a property, buying a foreclosed home is the best choice.

Doing It Alone

Despite their experience, even seasoned investors fail when it comes to closing a foreclosed home deal. There are several complex steps involved in buying a home, from assessing the market to inspecting the property to negotiating a good price.

Doing it all by yourself would make the process slower and more stressful. You will also need to familiarize yourself with auctions and financing options for foreclosed properties.

A reputable agent, like James Ernst, can help you find the right properties based on your needs, foreclosed or not. They'll also help you figure out the best deal with the bank when you choose a property. They'll also expedite and guide you through the lengthy paperwork.

Ignoring Competition

Professional flippers and investors are attracted to REO properties because of their lucrative pricing. You may be forced to place a higher bid due to stiff competition at the auction. In turn, that defeats the purpose of investing in a foreclosed property in the first place.

It's a good idea to discuss the anticipated competition within a certain neighborhood in Berks County with your agent before making an offer. Also, they’ll help you find the bank’s purchase price and place a comparable bid.

Buying a foreclosed property in Berks County often seems like a steal deal. The discounted pricing and high ROI make it an excellent investment. But you should be aware of the risks and competition associated with REO properties. Your best bet is working with a respectable real estate agent specializing in negotiating deals for REO properties. Call James Ernst today to see how he can help you realize your goal of home ownership today.

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