Are you on the house hunt with your eye on a foreclosed home that seems like a great deal you can’t let slip by? Find out what you need to know.
In the US, there is 1 foreclosure in every 2,814 homes. Sad news for the homeowner can be good news for you, though.
Do you know someone who bought a foreclosed home? Did they get a great deal? Does it have you wondering…”How does buying a foreclosure work? Is buying a pre-foreclosure a thing?”
If you are in the market for a new place and have your eye on a foreclosed home, find out what you need to know here.
Buying a Foreclosed Home
Popular HGTV shows make buying a foreclosure very tempting especially if you hope to sell it for a profit in the future.
Buying foreclosure homes doesn’t have to be complicated, but you should understand the process.
What Is a Foreclosed Home?
According to the dictionary, foreclosure is “the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.”
Taking possession of the property can sometimes be a long, drawn-out legal process potentially taking years, depending on the state. In other cases, the lender can bypass the courts and gain possession in as little as a few months.
Once the lender, usually the bank, has possession of the home, it will go to auction. If it does not sell there, it becomes what’s known as a real estate owned (REO) property. It is then put up for sale by an REO real estate agent.
This is where a buyer like you will find the home. If you are interested in bidding on a foreclosed home at an auction, you’ll want to do your research on how that process works.
Get Pre-Approved for a Loan
This is good advice even when not buying a foreclosure, but is especially important here. There may be many interested buyers on this great-deal, foreclosed home.
You’ll be a step ahead if you are already preapproved for a loan. It will show that you have access to the required money and are a serious buyer.
Work with an REO Agent
Hire an REO agent from a company with years of experience dealing with foreclosed homes. Their expertise can save you not only money but time and frustration.
Don’t try to do this alone. What you might save in fees is not worth the aggravation. Once you gain experience, you might try going it alone in the future.
Bid on a Home, Have It Inspected, Resolve Liens
With a foreclosed home, you know that you’ll be inheriting some problems, but you should still arm yourself with the information to know the depth of the problems you will face.
If possible, you might want to have the home inspected before putting in an offer so that it’s easier to walk away if the issues are more than you bargained for.
You’ll also need to clear up any liens on the property before moving forward.
The Fun Part
Finalize the purchase just like buying any other home. Once the home is yours, you can begin the repairs and renovations necessary to move in.
Home Sweet Home
Now that you’ve learned about buying a foreclosed home, you can go into the buying process with some knowledge under your belt. Bookmark our site for other moving tips and design ideas.