Buying a Foreclosed Property

Buying a foreclosed property can allow you to obtain a beautiful home for much less than it would cost were it not in foreclosure. Lending institutions do not really like to own houses; but when a home buyer defaults on their home mortgage by failing to make scheduled payments, the bank has no choice but to use the legal process to gain possession of the property.

Tips to Make Buying a Foreclosed Property Easier

1. When considering beginning the process of buying a foreclosed property, you should be aware that the legal process for foreclosure purchases varies from state to state and you should understand those laws in your state or seek the assistance of a qualified attorney with experience dealing with foreclosure purchases.


2. Contact the trustee in charge of the foreclosure to determine if there is a period during which the original owners of the foreclosed property can pay all missed payments in full and redeem their property; if this is the case, don't become too excited until you actually go to closing and the property is legally transferred to you.


3. Be sure to carefully inspect the property since almost all foreclosed properties are sold on an "as is" basis and there are no guarantees that costly repairs will not be required. Some property owners who realize they will be forced into foreclosure do not care for the property well during the last months they control the home or land. Some property owners even damage property before vacating it, removing cabinets, sinks, bath tubs, flooring, or other fixtures which can be quite expensive to replace.

Steps for Buying Foreclosed Properties

Below are the general steps required to purchase a property that is in foreclosure. Remember, the exact process depends on your state laws so consider these facts as a brief overview of what to expect.

1. Determine where properties scheduled to be foreclosed and sold are available through the classified real estate advertisements in your newspaper. You'll find information under headings such as Foreclosure Notices, Sheriff's Sale, or perhaps Real Estate Auction.


2. Let your attorney and the involved real estate agents know you have an interest in buying properties in foreclosure. Check with lender such as banks, savings and loans, and credit unions about properties scheduled for foreclosure. Government agencies such as the FHA (Federal Housing Administration, Veterans Administration (VA), HUD (Housing and Urban Development) to learn of properties in foreclosure.


3. Determine the exact process for purchasing foreclosed property in the state in which the property you wish to purchase is located.


4. Visit the property and inspect it thoroughly. Learn the current market value of the property by paying a property appraiser to visit the property. Learn the sales price of other properties in the area which have changed ownership recently.


5. Ask the foreclosure trustee what minimum bid is being considered by the lender. Then determine how you will obtain funds to pay for the property if you are fortunate enough to be the buyer. Get mortgage approval for the amount of the highest bid you expect to submit when buying foreclosed property. Don't put off approval until after you are obligated to pay and learn you may not qualify.


6. Have a title search performed to learn if there are any liens which could cause the purchase to fall through at the last minute.


7. Finally, make your best offer on the property in foreclosure by placing a bid at the real estate auction or sending your sealed bid to the specified lender by the date stated in the bid notice.

Good luck with buying foreclosed property. By shopping carefully and following these tips, you can make sound purchases of property in foreclosure whether you are buying a primary resident or investment properties.