An important tip on buying foreclosure:

That you see is what you get!

So, you want to buy a home in foreclosure? You've checked all of the liens, taxes due, and sales comps. You've driven by the property, studied the neighborhood, spoken with the trustee, and verified if there are any IRS or state tax liens against the Trustor/owner. But, there's one more thing to check out...the inside of the house.

There's only one complication, you can't get in! The owner/tenant is unfriendly or hostile and won't let you come inside the house. Perhaps the home is vacant, but you still can't peek in the windows since the curtains are drawn closed. So what should you do?

As a general rule of thumb, what you see on the outside, is what you'll get on the inside. In other words, if the property is in disrepair outside, it will very likely be in the same condition inside. If it needs paint, a new roof, structural repairs or replacements (e.g. shutters, windows, garage door, fence, etc.), or landscaping; you can bet it will also need new carpet, vinyl or tile flooring, kitchen cabinet repairs, counter tops, bathroom tile and fixture repairs or replacements, some new doors, appliance replacement(s), drapes or blinds, and a few wall patches.

Sound familiar?

On the other hand, let's say the landscaping looks good (freshly groomed), the paint isn't bad or chipped, but the house just looks tired, or like it hasn't been remodeled in at least 20 years. In this case, there is probably (still) some pride of ownership and the inside will be clean and well maintained; but also tired, or dated looking. A little paint, new carpet, drapes or blinds, minor repairs, and maybe even a new counter top will be all that is needed. That is if you want to maximize your resale value and sell it for the market value of a home in good condition.

So, how do you know what the condition is inside? What should you do if you can't get inside to verify the actual condition?

Here are a few ideas that might help:

• Knock on the door and try to gain rapport with the owner or tenant, by seeing if there is anything you can do to help them. Eventually, see if you can get in, for coffee or just to sit more comfortably.
• Tell the owner/tenant that you want to buy their house before it goes to foreclosure, but you need to do an inspection before you can make them an offer.
• Tell the owner/tenant that you are willing to pay them whatever the full market value of the house is, in cash and close before the foreclosure deadline, but you need to first get a look around. Afterward, you can gracefully bow out.
• Tell the owner/tenant you want to buy the property and offer them $50.00 if they will let you take a quick look inside.
• Tell the owner/tenant that you plan on bidding on the property at the upcoming auction, and that you hope to be the successful bidder. If you purchase the property you would be willing to pay them $1,000.00 in moving costs and even let them stay in the house for a month until they can find a suitable place to move.
• Try to peek in the windows (but be sure no one is home...ring and knock first, and bring a friend for backup).
• Talk to the neighbors on either side and see if they know, or if they have been inside the home recently.
• Try to find out why the property went into foreclosure. If it was a hostile situation, they may have vengefully destroyed the interior.
  Check the MLS for any history of listings on the property in the last 5 years. There may be comments on the condition.
• Check the city building department and verify if there have been any recent building permits.
• Check with the police to determine if there have been any major crimes at this address, or on the street recently.
• Ask the neighbors if they have seen any police, fire engines or ambulances at the house.
• Estimate the outside repair costs, then double it to cover for possible inside repairs.
• Budget 10% of the fixed market value of the property for repairs.

Remember that everyone undergoing foreclosure, is experiencing tremendous distress. They most likely are down on their luck or out of a job. They don't trust the system, the bank/lender or anyone trying to steal their property away from them. They are optimistic that they will find a solution and they will "find" the money. The odds of winning the lottery, or money falling out of the sky are very low and so is their chance of resolving their problem in time. You need to determine which approach works best for you and your personal style. But remember, you must look and sound like you are their answer (their white knight) to resolving this terrible situation. You must gain their trust, or pay for it!

Shark Bait - The foreclosure buyers' software, will help you go through a comprehensive evaluation process. With its built-in step-by-step checklist, you will be sure that you have verified everything before you make any offers on a foreclosure property. Shark Bait's "Bid Info" form will help you analyze the cost of repairs, market value after the repairs are made, sales costs, resale commissions, your maximum breakeven bid amount, and your cash-on-cash return on investment. Keep all of your notes together and even photos of the property for quick reference for every property in the system. Let Shark Bait help you find the hidden equity in any foreclosure property, and then help you make certain there are no surprises!

Whether you use Shark Bait, or just paper lists and notices out of your legal newspaper and your own research at the County Recorders office, you need to proceed cautiously and diligently. Develop a degree of expertise on the cost of repairs. Get a contractor to help you estimate the costs for a specific house, or in general for any house of a certain size for each of the typical repair items. Visit your local home improvement store (Home Depot, Lowes, etc.) and talk with each departments sales help for advice and estimates for each type of repair. A don't forget to keep a contingency.

We hope this tip was helpful in your foreclosure buying efforts. Please visit us at http://www.digitaldeal.com and take our free tour of the Shark Bait software.

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