By Rick Sharga, Vice President of Marketing

The foreclosures market is gaining popularity among first-time home buyers, real estate bargain hunters and real estate investors. Foreclosure real estate properties can be purchased at a discount  of 10 to 40 percent less than their present market value, making them an attractive investment at present.

Despite what you may see on late-night cable TV, investing in foreclosure real estate properties isn’t an easy “get rich quick” formula. Real estate lenders aren’t ready to give foreclosed properties away, especially in a real estate market where real estate property prices continue to go up. Homeowners in financial distress still have some leverage to negotiate the purchase price, particularly early in the foreclosure process.

“You have to practice both diligence and patience when looking to buy a foreclosure property,” explains Jim Saccacio, CEO of  RealtyTrac. “There really are some fantastic deals out there, but you have to be willing to wait for the right opportunity, then make a realistic offer so the seller will view you as a serious buyer.”

With interest rates slowly surging upward, real estate property experts predict an increase in the number of foreclosure real estate properties on the real estate market. Online based real estate services such as RealtyTrac provide access to foreclosure and pre-foreclosure information that was previously available only to professional real estate brokers and property investors. Today, however, every homebuyer can access these same services and information to identify and research potential home purchases, as well as use the tools and professional resources they need to help them buy the real estate properties that they want.

Real estate sales in this marketplace can move quickly, so there’s no time to make uninformed or low-ball bids on good properties in a weak attempt to save a few dollars. Nothing turns a real estate seller off faster than a low-ball offer on a fairly-priced property. In most cases, doing so may irritate the real estate seller to a point that no further negotiations will be considered, meaning that the real estate investor or buyer may have essentially lost any opportunity to buy the property. By the same token, making an uninformed offer to buy a property that is too high may get you the house you want — along with a long term monthly reminder that you overpaid!

Find out what the house is really worth

In order to make an acceptable real estate offer, you first need to know what the actual value of the property actually is. Look at the original purchase price and recent comparable property sales in the area to determine the current value of the property. Real estate buyers and investors can obtain information on recent sales in the area from a professional Realtor or via RealtyTrac’s Comparable Sales Report. Ideally, you should look at sales in the area over the past six (6) months. Then do a quick drive by each property on your list and note its condition, size, appeal and location. You should also look for properties that are currently listed for sale in the same area and research the same information for those properties, as well. This information, along with a thorough examination of the condition of the target property, should give you a good feel for what it is really worth.

Find out how much is owed on the property

You should also find out the amount the seller is in default and the remaining loan balance. In order to determine a reasonable offer price, you’ll need to know — at a minimum — how much money it will take just to satisfy the debt to the lender (or lenders). Knowing this will help you determine whether the property is within your price range or unattainable considering your current finances.

The estimated loan amount and default amount are included in the foreclosure documents filed with public records, and RealtyTrac posts this information online for subscribers. Additionally you can order RealtyTrac’s Legal and Vesting Report or Transaction History Report to check for any other mortgage loans on the property.

Ultimately, even if you’ve presented what you believe to be a fair offer, you’re likely to receive a counter offer from the home seller. That’s to be expected as the negotiation process is a major part of real estate sales in general — even on real estate foreclosures. A successful negotiator in any situation must be informed, prepared and realistic. A good real estate investor must practice patience and diligence in order to get the right property at the right price.

Lastly, it’s important to remember that real estate purchases can be rather emotional, especially as you grow attached to the idea of owning a particular property. It’s important to know what you are willing to spend on a home, regardless of your emotional attachment to it, so you need to set a limit and stick to it.

Edited by Real Estate Pro Tips