Buying a foreclosed home means you're purchasing something someone has lost. Since someone else couldn't pay for his home, you earn the right to buy it. As such, a foreclosure purchase can be a hard thing for both parties. The person with a foreclosed home will have to deal with losing his home, while you will encounter challenges in locating the foreclosed homes and in executing the transactions. However, this difficult task can be very, very rewarding if you do things right.
While the legal steps behind buying a foreclosed home differ from state to state, here are a few general steps you can take to help ease the process:
- Know what you're getting into. There are certain advantages to buying a foreclosed home. The most impressive one is that you'll be able to buy it at a great discount; the price cutback can even go as high as 30 percent! This is because the bank or lender will want to salvage as much of its original investment in as short a time as possible. You can take advantage of that fact and make some big savings.
- Find an agent. Some sellers won't even think about accepting offers from buyers that aren't represented. Play it safe and get an agent with experience in foreclosure purchases. In the chance that you do find a deal that requires you to have an agent, you'll be glad you have one already.
- Look for a home. Search the Internet and any other listings in real estate publications. You can also contact lenders for a list of foreclosures on real estate owned properties. Government institutions like Fannie Mae and the Department of Housing and Urban Development will also have information of foreclosed houses for sale. Once you've found a suitable prospect, get any and all contact information of the seller and make an inquiry.
- Inspect the property. As with any purchase, it's best to make an informed decision. Try to schedule a tour of the property so you can go check it out. You may want to take others, especially those with expertise in housing. That way, you can determine whether a house that looks bad is merely a fixer-upper, or due to be condemned in a week.
- Check out the competition. After getting as much information about the property as you can, it's time to compare it with your other prospects. That way, you can determine which foreclosed home will give you the best deal possible. If you have an agent, he can look for comparable deals for you.
- Discover any hitches. You'll want to find out about any liens a foreclosed home might have. You don't want to be paying someone else's unpaid property taxes. Remember, you're looking for a good deal, and that means getting a home without any excess baggage.
- Get a broker. Once you've found an excellent deal, contact a listing broker and make an offer. After that, all you can do is cross your fingers and hope the seller accepts.