Reader’s Question:

What risks am I facing in buying a foreclosure at an auction here in Dallas, Texas?

Michael

Dallas, TX

Buying a foreclosure property at an auction there in Dallas, Texas would be the riskiest way to purchase a property. At any auction, you almost have no safeguards or protection. This is most especially true in case you do not have escrow, estate agent or a title report. Furthermore, you will not be allowed to inspect the property and therefore, you have no idea or warranty on its condition. Also, the auction might be an all cash transaction that you have to complete in a week to a month.

In case the property is occupied, it could take months to evict the tenants. Tenants could also steal from the property or vandalize before eviction. Also, the former owner could sue you to overturn the sale, particularly if you flipped the property for a nice profit. Buying a foreclosure property could be rife with risk but it could also have great rewards. You could minimize risk by fully understanding the foreclosure process.

Tags: Dallas Real Estate, foreclosures, real estate

Reader’s Question:

I am looking for an investment opportunity in real estate here in Dallas, Texas and I plan to buy a pre-foreclosure property. Do you think it would be risky if I buy a pre-foreclosure?

Jenna

Dallas, TX

Buying a pre-foreclosure property in Dallas, Texas is kind of riskier than buying a real estate owned. An example of the risk you might take is that the desperate sellers could lie to you about the condition or the presence of liens on the property. The thing that you would really have to pay close attention to is if the seller has entered bankruptcy. If the seller has already been in bankruptcy, the deed might not be valid unless it has gone through bankruptcy court. Furthermore, even if the seller files bankruptcy after the sale, you might have to deed the property back to the seller up to three years after the sale.

Investors certainly do hope to purchase foreclosed properties well below market value. If the seller is already under bankruptcy, the bankruptcy trustee could claim that the sale was a “fraudulent transfer” that was not fully valued to pay off creditors, and this will force the deed back into the bankruptcy estate. To lessen these risks, you can get an inspection, use a knowledgeable escrow agent and look at the property yourself.

Tags: Dallas Real Estate, foreclosures, real estate

Reader question:

What are the tax benefits of buying a piece of Plano Dallas Texas real estate?

June

Excellent question, June.

Although nobody likes the IRS, we all get a little excited when we find a deduction or rebate that we are eligible for. Whatever you can say about it, the nation’s tax system treats homeowners fairly well, so you can save a bit on your taxes if you own some Plano Dallas Texas real estate.

You can, for instance, deduct the interest on the mortgage for your Plano Dallas Texas real estate. This may even at times refer to the insurance premium for your home. It also goes for home equity loans. It gets even better when you sell your home. Unless you have a very expensive home–over $250,000–then you aren’t going to have any of the money you get from selling it taxed.

Cheers,

Fashun Guadarrama

Reader question:

Hi. I am originally from New Orleans, but evacuated to Dallas during Katrina. I have been living in an apartment since then, even though I had a great house back home, but now it’s too late to go back and I am looking for Dallas Texas real estate for sale. Do you have any tips on finding foreclosures in the Dallas-Fort Worth area?

Lyssa

Great question, Lyssa.

I would point everyone who wants to find Dallas Texas real estate for sale that has been foreclosed on to the Texas HUD (Housing and Urban Development) website. They have a great, simple search that you can do on HUD owned homes in your area. In addition to that, it’s not a scam. Most ads you see for foreclosures in the newspapers are scams, and will take your money to point you towards homes you can find for free.

Also, the Texas HUD is offering a special discount program on HUD Dallas Texas real estate for sale to those who were evacuated due to recent hurricanes such as Katrina or Rita. You can get a 10% discount on the value of the home so long as you make your offer within the first five days of its posting on the HUD website.

Cheers,

Fashun Guadarrama.