3 Secrets to Buying a Foreclosed Home

While the foreclosure crisis is not what it was, there are still a lot of homes on the market that have been foreclosed. If you have the patience and know what to expect, you could get a good deal on a home by purchasing a foreclosed home. It may take extra work, but the rewards could be well worth all your effort.

Today, we are sharing with you 3 secrets to buying a foreclosed home. These secrets will cover tricks of the trade, who you will actually be purchasing the home from, and what to expect.

  1. There Are 3 Ways to Buy a Foreclosed Home

    The first thing to know about buying a foreclosed home is that the more you know the better. That is why our first secret isn’t a secret at all. Instead, it’s the 3 different ways you can buy a foreclosed home:

     
    • Pre-foreclosure Homes
      This is the stage in the foreclosure process where the current homeowner had the opportunity to bring the loan up to date. They have been sent a Notice of Default and are given about 3-6 months. To avoid having the foreclosure on their records, the home owner might try and sell their house.
    • At Auction
      If the homeowner is unable to bring their loan current, the lender may try and sell the home at auction. The trustee is usually the one at the auction to represent the lender and receive the cash for the winning bidder. The opening bids usually equal something like the balance of the outstanding loan + the accrued interest on the loan + the cost of the foreclosure process + the cost of the trustee.
    • Real Estate Owned Property
      If no one bids the amount of the opening bid, the trustee will purchase the home and it will become a Bank-Owned Property or a Real Estate Owned property. According to RealEstate.com, buying a foreclosed home in this stage is the safest way to purchase a foreclosed home.
  2. No Disclosures

    In a REO or Real Estate Owned property where the bank is the one who actually owns the home, it is unlikely that the bank will share with you any information about the property. That means no information on permits and no records.

    Here is where the extra work comes in and where doing the research comes in handy. Zillow recommends actually going to the city’s building department and checking the property’s permits and records.

    Quick Tip: Have your realtor check to see if the home has been sold in the last 5 years. If it has, it’s likely to have the previous disclosure information.
  3. Foreclosed Homes are “As Is”

    One man recently bought a foreclosed home and did not expect what happened. Not only did the previous homeowners take all the appliances, which you might expect, but they also took all the trim off the walls, the light fixtures, the cabinet handle and other odds and ends.

    When you purchase a foreclosed home, you are purchasing your home as is.

Summary

Buying a foreclosed home has advantages and disadvantages. With a lot of research, a good agent and some patience, you just might be able to get the deal you’ve been hoping for. If you have any questions, or if you are interested in purchasing a new house, please give our office a call.

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