I’m amazed by the great lengths—literally and figuratively—some people will travel in order to find a bargain. Last weekend, my wife dragged me to two different discount outlets across Bergen County in search of an advertised special on K-Cups. I do appreciate her considering my caffeinated state of being and, unless my calculations are off, I believe we saved about ten bucks. I’m certain we burned about twenty bucks in gas but, hey, I now have twelve dozen plastic java pods that will carry me through until retirement. But I’d rather buy my Folgers and Friskies at the grocery store and pay a little more for the sake of convenience. Call it penny-foolishness, but the small dent that the extra buck or two puts in my budget won’t kill me.
My real estate investment pursuits, however, know no such frivolity. When I’m spending thousands of dollars on bargain properties, acquiring dwellings for the lowest possible price translates into a big boost to my bottom line. I choose my investment deals wisely. Sometimes knowing how to buy a foreclosed home in NJ pays off. But what seems like a bargain is not always a good deal in the end.
How to Buy NJ Foreclosed Homes
The Garden State had the highest number of foreclosures in the nation last year. While overall activity declined in 2017 over 2016, New Jersey saw approximately 70,000 homes trudge down the path to a sheriff’s auction, according to Attom Data Solutions. But that’s not the whole story: Foreclosure starts are actually down. You see, what we have available on the foreclosure market are largely leftovers from the housing crisis that are still winding their way through the bureaucratic process. That means these homes have been sitting vacant and potentially unmaintained for years.
It’s important to carefully find out as much as possible when buying a foreclosure auction home. Unless you’re able to manage at least a quick visual interior and exterior tour of a property, there’s simply no other way to evaluate the cost of repairs or uncover the home’s glaring shortcomings. Buying at auction means buying “as is”—bypassing the means to perform a thorough, professional inspection. You could get lucky, but it’s better to not leave your dollars to chance. Between the cash-strapped homeowners who haven’t been able to address cosmetic and structural issues and the banks who simply don’t care, an unforeseen rehab cost could take a big bite out of potential profits if your bid gets accepted.
That’s if your bid is the winning one. Once a home reaches the auction phase, buying foreclosed properties gets riskier, more urgent, and more competitive. A publicly-advertised listing will likely draw the interest of more bargain hunters than would be seen in the pre-foreclosure market. One situation you want to avoid is a bidding war. I typically set my price before going; if I win the contest at that level, then mission accomplished. No matter how much I fall in love with a prospective buy, overpaying for a house puts my ROI in jeopardy. Besides, in New Jersey, there is no shortage of opportunities in the foreclosure market, and I can merely amble on to the next property.
When you do win an auction property, it’s wise to know the legalities that surround the process. One of the nuances of New Jersey law allows homeowners to reclaim the property within ten days through a right of redemption. While it’s unlikely that a financially-burdened owner could come up with the delinquent balance so quickly, I have seen fellow investors get burned occasionally by the loophole, so it’s prudent to be aware of the possibility. Any good-faith money plunked down to buy the home is non-refundable, and that loss could put you in a hole without any asset to show for it.
Around the Block: A Better Way to Find NJ Investment Properties
I find the auction process exhausting. Sure—I’ve come across some winners through sheriff’s sales, but all the legwork and the unknowns create some anxiety for me from time to time. Dealing directly with distressed homeowners in the pre-foreclosure period has yielded much better results. In many cases, an anxious seller may be willing to reach an agreement before the judicial authorities take ownership of the property. As difficult as the situation might be, my involvement has often amounted to enabling a much-needed exit for the seller while adding a deeply discounted asset to my portfolio.
Without a doubt, getting motivated home seller leads can be a challenge for most. But being an independently owned and operated HomeVestors® franchisee makes it much simpler. Because of the highly-recognizable “We Buy Ugly Houses®” marketing campaign, my burden of racing around the block to find foreclosed properties is not a concern anymore. HomeVestors marketing goes the extra mile to lead me to great deals, and I don’t even need to burn a ton of fuel. Contact HomeVestors today to see how becoming a franchisee might do the same for you.
Each franchise office is independently owned and operated.
Prior to joining HomeVestors, I spent 20+ years as a senior corporate executive. The money was good but I just no longer enjoyed what I was doing. I had been looking at HomeVestors for a couple of years but they were not offering franchises in N.J at that time. I had zero experience in real estate investing and was impressed with the training and support HomeVestors offered. HomeVestors opened up the NJ market in February 2007 and I started in July. Best decision I ever made. We got off to a fast start and have purchased a couple hundred properties since. We could not have done this without the training, systems, marketing and support HomeVestors provides. We haven’t looked back since. We became Development Agents in 2010 and really enjoy working with new franchisees when they come on-board and helping them build a successful business.