How does buying a foreclosed home work?
Written on December 4, 2009
How do you go about buying a foreclosed home? I see ads for foreclosed homes for 200,000 or 300,000 dollars when their worth twice that. Does that mean I give the seller/bank that much money and I get the house? I’m sure I’m missing something here. If possible please provide a link so I can get more info.
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Filed in: Foreclosure News.
You are buying it from the bank. The only difference is there is more paper work than normal. Good luck. You can really get some great deals buying foreclosures.
We just bought a foreclosed home and we had to go straight to the bank that did the foreclosure. A lot of time the prices that you see are what the bank is still owed to them by the previous owners. Do some research and try and find out what the house sold for originally. Also talk to the Realtor that has the listing and they should be able to help you.
I am not an expert, but I have seen many companies that offer foreclosed homes through ads in newspapers. I have heard of many “foreclosure company” scams.
I have also seen actual homes currently in foreclosure posted in Town Halls and Municipal Buildings. So, if I wanted to buy a home in foreclosure, I would start by checking the municipal courts in that area and make the offer directly. They usually provide information, descriptions and details of the property, an outline for offers, along with the final date to submit your offer.
Once, I happened to witness an offer or bidding on a foreclosed property. The person making the offer seemed very happy – probably because there were no other offers/bids.
Buying a foreclosed home is a bargain at times, it depends on what phase of the foreclosure you purchase the house.
The phase you are speaking of is when the property owner did not bring the mortgage current and it did not sell at the auction, hence now called a REO (Real Estate On-hand.)
Once all the legal paperwork is completed and the property has legally transferred to the lender, they assign the property to a lender to sell for them.
At this point you are simply purchasing a house as you would from a person that listed it with a real estate office.
You will have to come up with the funds to close, by getting a loan from another lender. In a few instances the current lender might finance the property for you. There are the government lenders also FHA and VA.
The other way is purchasing at the forelcosure auction. In order to bid on this property you must normally have all cash and be able to prove it in order to bid. If you are the highest bidder, the lender will sign the property over to you. There is a few days of waiting for this to happen.
The best way, in my opinion, is to purchase directly from the current owner. It takes a little skill to do this. You have to figure out if you have a good deal or not.
You have to give the owner something to move, bring his mortgage current, see if there is any damage to the property or qualify for a new mortgage, but you can normally pick the property up a little cheaper.
I hope this has been of some use to you, good luck.
“FIGHT ON”