Buying foreclosures can be a much different process than many buyers are used to. A foreclosure isn't sold through a real estate agent. In fact, it's usually auctioned off to the public. They sell faster than other homes on the market, and best of all, they can be bought for extremely cheap prices. Whether you're buying first home or looking to invest in valuable property for a discount, foreclosures can be a great opportunity to save anywhere from 10% to 50%.
The first step is to find homes for sale through foreclosure, and the easiest way to do that is to consult a multiple listings service (MLS). An MLS can net you hundreds of foreclosure listings within seconds with a simple search, leaving you more time to learn how to buy a home through the foreclosure market. Using our search engine for example, you can find all kinds of new home listings, commercial properties or even fixer uppers, all available through a quick house sale format where you'll have plenty of opportunity to save.
After you narrow down your options, you'll want to secure financing. Most foreclosure sales are held by lenders looking to sell home fast, so if you're the winning bidder at auction, you'll have to be able to provide proof of financing immediately after a sale concludes. It's best to take care of this beforehand.
Also, before the sale occurs, be sure to visit the property you're considering. If you can, secure an appraiser to have them tell you what the home is worth. You can use this to help you calculate your potential savings.
Another option to consider before attending a foreclosure auction is to approach the homeowner directly. If I'm a homeowner in default, one of the best options I have to avoid foreclosure is to sell my property myself before an auction occurs. If you buy my home, it allows me to pay off my debt while providing you with a great discount, and often times allows me to walk away with some money in my pocket! This is a best case scenario for everyone involved.
However, if you choose to buy at auction, be sure to keep yourself within your limits. Use the appraisal value of the home as a guide--there's no reason to pay full value for a foreclosure home, because there are plenty of deals out there. If bidding goes higher than you anticipate at auction, don't feel obligated to keep pressing your luck. Get out of the bidding and find a new property to pursue.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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