Buying a Foreclosed Home

With today’s market there are a number of attractive homes in the foreclosure market. However, buying a foreclosed home is much more risky and complicated than the traditional home buying course. There are a few tips that you should know before trying to buy a foreclosed property.
First you can buy a home when it’s in the pre-foreclosure stage, or when the owner of the house has been given a certain amount of time depending on the state to become current with the mortgage or give up the home. Buying a house in this time period often is easier for experienced buyers because you have to deal directly with the homeowner. Not only are they likely upset about losing their home, often homeowners don’t know their properties were made public in a foreclosure listing. Another thing that makes buying homes during this period difficult is the time constraints. Some states give homeowners only 30 days before the bank puts it up for auction. Not a lot of time to make a deal and transfer the mortgage.
If a home does go to auction, the next stage in foreclosure, buying the home then can again be risky. The auction usually happens on the steps of a local courthouse and is difficult because you usually have to pay cash for the home. Homebuyers can’t finance auctioned homes. Additionally you have to buy the house without seeing it. And beyond all of that you can’t get title insurance so if the house has a tax lien attached to it the new owner, you, has to pay it off.
If no bids are high enough to pay for the outstanding loan or no one shows up to the auction then the next step is taken. This means the bank will take ownership of the home and use a real estate broker to sell it. This is the best way to buy foreclosed properties in terms of ease. However, you’re not likely to get a discount any longer because the bank usually tries to sell for right at or close to the market value. Try negotiating though because if a bank has a number of properties they are more willing to chance their asking price.
Another type of foreclosed properties is the homes that were bought with FHA or Department of Veterans Affairs loans. When these homes go into foreclosure they are put up for sale by the government. These listings are updated daily and come with a detailed property report, but can only be bid on by HUD-registered brokers. Better yet, for the first 45 days they are up for sale the listing is only for homeowner occupancy, which means you don’t face competition from foreclosure investors. This means the best chance for the good properties at a reasonable price.
You can find listings of foreclosures at Foreclosure.com, Foreclosures.com and RealtyTrac.com All of these sites list foreclosed properties and charge monthly subscription fees for access to their databases.

Bill Vourazeris
443-618-2880