How to Buy Real Estate for Pennies on the Dollar

MSN Real Estate reports 10 cities with single-family dwellings selling for under $10,000.
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In the early 1970s, brownstone residences in Harlem sold for for less than $50,000. In the summer of 2013, the New York Daily News reported brownstone sales averaging $1.65 million. Real estate is generally cyclical -- prices go up in good times, and down in bad. Also, cities and regions fall sharply in and out of favor. Real estate is usually cheap somewhere: Harlem in the 70s, Detroit, Las Vegas and the California Inland Empire region in 2013. Finding cheap houses takes work and time, and buying them entails risk.

Step 1

Begin the process of buying inexpensive housing by getting a loan approval from a lender. Before you begin looking, you need to know how much you can afford. Often, distressed housing sells for cash. If you don't have cash, you need to be able to close the sale quickly -- whoever can close the sale first usually gets the house, even when another buyer is offering more. Banks have no emotional attachment to the real estate they're selling, and they need to move unoccupied and often deteriorating real estate fast.

Step 2

Find a real estate broker with extensive experience working directly with banks having foreclosed housing for sale. Buying bank-repossessed housing without a realtor with experience can be risky, particularly if you haven't done this before. A realtor with experience selling bank repos in your area, particularly one who already has direct relationship with one or more banks offering them, can give you invaluable advice. Buying a bank repo is often a relatively complicated process in comparison to buying a house from a private buyer.

Step 3

Find houses both through your broker's lists, often provided by banks she's working with, and through the Web. Foreclosure websites have lists of available housing in your area. You can also find local housing databases online, and filter them to show only repossessed housing. Particularly when you're beginning your search, take your realtor with you. She probably won't have enough time to go with you every day, but at the beginning she can give you a better idea of the underlying value of the real estate you're looking at. Spend as much time as you can driving around and looking at a lot of houses before you narrow your search and make your first offer. It's better to miss an opportunity, than to pay too much.

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