how to buy a foreclosure that is not on the market

Listings for recently foreclosed homes might not have a sales price, but most include the most recent sales price or the amount needed at auction to pay off the current mortgage.
Check your local paper’s public notice listings to find out which homes are going to be auctioned on the courthouse steps and the estimated date of auction.
The banks must run a public notice once a week for four weeks prior to the auction, so this gives you a chance to check out the neighborhoods of the upcoming foreclosures.
Using a agent usually means you must work her fee into the sales price of the home, but she might be able to give you insider information quickly and efficiently.

The process for the auction varies by state, but typically properties are sold as-is, where-is, subject to existing loan and liens, and require payment in full and in cash, at the time of sale.
Preforeclosures are much like any purchase of real property and you typically have the opportunity to get inspections, title insurance, and financing prior to completing the purchase.
It is also possible to purchase the property Subject To the existing loans; which is similar to assuming those loans, but does not necessarily require cash or good credit—this is the method often taught by late night promoters, and has risks that should be carefully considered.
Buying an REO is very similar to buying any home that is listed with a real estate agent, and you have the opportunity to do inspections, get title insurance, and get financing.
Opportunity Traditional Financing Subject-To Financing Title Insurance Inspections Eviction Required Overall Risk Pre- Yes Yes Yes Yes No Low Auction No No No No Maybe High Bank Owned Yes No Yes Yes No Very Low 2.
If you value your time, we certainly hope you will consider using our service, which provides not only the information on these foreclosure filings, but also combines it with other public records, maps, and tools that can save you time searching, tracking, and managing the foreclosures you are interested in.
Properties are also typically sold while the owner or renter is still living there, which means there is no opportunity to inspect the property, and you may have to do an eviction after purchase.
This will vary a lot depending on the stage of foreclosure, and whether or not the property is listed for sale.
Prior to the completion of the foreclosure process and the owner losing the home, you can purchase the property from the owner.
For those willing to work, and in some cases take some risk, foreclosures represent a unique opportunity for acquiring real estate at discount prices.
By far the riskiest method of purchasing foreclosures, buying at auction can also offer the deepest discounts due to these risks and the limited number of buyers willing to take them.
These real estate agents often handle the eviction and clean up of the property, in addition to listing it for sale.
If you are buying a preforeclosure, pay extra attention to the auction date if scheduled, since many properties are sold at auction despite being just days from closing escrow.
Now that you know which foreclosure stage or stages you you want to focus on, and your desired outcome, you are ready to start looking for foreclosures.
Other sources you should consider include foreclosures, new home projects, for sale by owner listings including Craigslist, and even local rental data.
One of the most difficult parts of buying real estate, foreclosure or not, is determining what price to pay.
If an investor fails to bid at auction, the property is essentially sold to the bank and becomes bank owned.
Most banks, however, do require that the property is purchased “as-is”, and may also impose other non-standard terms, so it is especially important to work with an experienced Realtor&reg that can explain these terms.
After you’ve gotten burned once or twice, and when all the stars align — the list price is within your budget, the house checks out, the repairs aren’t substantial, and the bidding so far is lukewarm — pounce quickly and ruthlessly, like a Serengeti speedster tracking down a gazelle.
Get acquainted with a real estate broker who has a relationship with banks that specialize in foreclosed homes.
Often, the banks that set the list prices on foreclosed homes get it wrong.
Knowing how much you’re likely to spend on repairs and improvements on top of the asking price for the home will let you know whether you’re getting a killer deal or getting hoodwinked.
"Foreclosed property." Hmm, you think, maybe I can get a good deal here? Fret not, surveyors, you’ve come to the right place.
You can make an offer to purchase a property when it’s in pre-foreclosure, when the lender agrees with the homeowner to accept less than the outstanding balance of a mortgage loan and avoid foreclosure.
Regardless of which phase you are attempting to purchase the property, how do you begin the process? There is a growing selection of foreclosed homes to choose from across the country, as today’s faltering housing market yields hundreds of thousands of these properties.
So [buyers] kind of end up in the same position as the people who currently own the house in that [they] can’t get financing or can’t afford the financing that’s out there,” says Bobbi Dempsey, co-author of “The Complete Idiot’s Guide to Buying Foreclosures” (Alpha).
One caveat: When you buy a property at an auction, be sure you have investigated the “right of redemption” law, which means homeowners can reclaim their property within a certain period of time if they pay all past-due amounts and applicable fees for the property.
According to Dempsey, foreclosure sale ads from the U.S. Department of Veterans Affairs (VA) and the Federal Housing Administration (FHA) are posted in the newspaper on a regular schedule; her book advises readers to contact the classified manager at the paper for the schedule.
Depending on if its a Fannie or Freddie loan, you may be able to find the agent before it lists and ask to be notified…or have any agent sign you up for an automated email alert for that specific property…so you can make an offer the day it comes on market.
I have been successful in the past in contacting the listing agent BEFORE it came on the market, but it takes a bit of 'detective' work to first find out who the correct bank or asset manager agent will be and then who the listing agency is.
The ONLY thing you might be able to do to find a home PRIOR to it being listed (not the one across the street, obviously), is work with a real estate agent that participates at auctions.
They must hire an asset management company to control the property (there are hundreds throughout the USA), who in turn hires a real estate agent to list and sell the property.
The only way to do this is by getting it listed with a real estate agent, who put's it on the MLS which in turn will likely generate multiple offers, which will then increase the sales price.
If the person that was at the home told you that the lender was getting ready to list it, (and they were cleaning it) then, it most likely already has a listing contract on it with a selling agent.
It is very uncommon to contact a bank and be able to purchase a property not listed with a real estate broker.
Additionally the banks usually require for that selling agent to have it on the market for a period of time before they will review the offers so that they are more likely to get a higher offer for the home due to the competition.
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Have you ever tried searching for the home on Redfin? Does it show up as a purple ‘Foreclosure–Not for Sale’? If it does, ‘favorite’ the home and the day the home goes on the market as a ‘MLS-listed Foreclosure’ you should get an email form Redfin about it’s updated status.
I had a client who did this–had stalked a property as a short sale, favorited it then, it disappeared off the MLS (when it was foreclosed upon) and was notified by us the day it came back on the market as an MLS-listed Foreclosure.
Also, an estimated price on Zillow, or any other site, is not as accurate as an agent who knows the current market value of property and is in the business of selling homes.
She found the agent it was listed with and had discussed a fair market value for the property that the bank would be willing to consider and had it ready before any other offers came in.
Banks and investors will likely continue to withhold REOs until the market value of the properties appreciates, allowing them to sell the homes at higher prices.
Releasing REOs onto the market also chips away at home prices in general, depressing the value of the homes of other customers — who could already be teetering on the brink of foreclosure — and the additional REOs that lenders hold on their books.
But the extent to which lenders keep their stock of REOs — industry parlance for "real estate owned" properties — off the market may be much larger than most people think.
In fact, if lenders turn their REO release valve to full blast, the deluge of foreclosures cascading onto the market could plunge the country into a recession, said Thomas Martin, president of consumer advocacy group Americas Watchdog.
It’s a testament to lenders’ fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.
Analytics firm CoreLogic provided an even lower estimate, suggesting that just 10 percent of all REOs in the country are listed by their owners, which include mortgage giants Fannie Mae and Freddie Mac as well as the Federal Housing Administration.
Fannie Mae, for one, reported in the first quarter of 2012 that it was unable to market 48 percent of its REO inventory because many of the homes were either still occupied, under repair or being rented.
Even if the bank that owns the foreclosure would let you make repairs before closing so your lender would approve your mortgage, you’d have to pay cash out of pocket for those repairs — a bad idea, because the deal could still fall apart and you’d be out that money, Snow says.
However, if you’re buying a house in sub-par condition or in an area that has been hit hard by the mortgage crisis, a longer market time is expected.
Until all the houses on the block are sold, there is going to be one foreclosed house bringing down your property value.
If you are buying your home with a mortgage loan, you have more flexibility on the price, since the initial down payment is going to be around 20% of the house.
For example, a good property in an up-and-coming neighborhood will be purchased quickly – usually by a real estate investor or an eager person looking for a new house.
Multiply that by your home’s livable area to determine an “average” price for your house.
Unless your house is in excellent condition and there is not much work to do on it (in which case, paying average is great!), look at the bottom two-thirds of the prices.
You’ll need competent assistance from a real estate agent, attorney, investor, or other professional familiar with local laws and the real estate market, specifically as they apply to your market’s foreclosure system.
Learn about the risks associated with buying a foreclosed home at each stage of the foreclosure process.
Whether or not you should consider buying a foreclosed home depends on several factors, including your homeownership experience, your financial situation, and whether you have access to professionals with experience buying foreclosed properties.
To learn more about buying foreclosed homes to serve as rental properties, read Nolo’s article Buying a Foreclosed Home as a Rental Property.
Before you jump on the bandwagon, learn whether you’re a good candidate to do so, as well as the risks and benefits of buying at each stage of the foreclosure process.
It helps to have already learned the many lessons about the true cost (in time and money) of owning a home (beyond the monthly mortgage payment) and to have developed relationships with home contractors and other professionals who can help you.
Existing or prior home ownership can give you the equity stake you need to cover foreclosure purchase costs, provided you have a solid equity position available in your primary residence.
The most important thing to understand before jumping into the foreclosure market is that these properties were given up by owners who couldn’t afford the payments anymore.
Maintenance and cleanliness can be a problem in foreclosure properties because of the circumstances under which the previous owners moved out, and because of the time the house may have sat empty.
Buying a foreclosure (FCL) is often touted as a way for both owner-occupants and investors to get a great deal on a property.
Buying a home from a lender has its issues as a result of the increased level of bureaucracy and the limited transparency afforded to those who buy foreclosures.
Damage is not uncommon in foreclosure properties and it may be caused by vandals or the former owners.
Remember the average 27% discount we talked about earlier? If it’s priced above the comparable sales, you should think twice about making an offer — unless the target house has certain unique features that account for the higher list price.
It only makes sense to show the bank you are financially capable of buying the foreclosure property.
Before buying a foreclosed property, you should seek the advice of a real estate agent who is familiar with your local laws and conditions.
There’s a good chance the foreclosure property will be priced below market value.
This means you must do two things before buying a foreclosure property.
To be more accurate, there are three ways to buy distressed property — one strategy before the foreclosure takes place, and two strategies after it takes place.
The foreclosure property was discounted by 27%, which is the average discount (nationally) determined by the RealtyTrac study.
Note: The process of buying a foreclosure may vary based on where you live.
If you’re a first-time home buyer, or a first-time foreclosure buyer, you should enlist the help of an experienced real estate agent.
Bottom line: If you want to buy a foreclosure home, you need to stay on top of your market.
The point is, you need to familiarize yourself with the foreclosure process in your state.
Zillow views its latest site enhancement, which went live late Wednesday, similarly to when it shook up the real estate market in 2006 by debuting a site that listed individual home values, called "Zestimates," of for-sale and not-for-sale homes.
Zillow is displaying detailed information on about 1.5 million homes that are in foreclosure but not yet for sale, in a bid to position itself as the go-to website for homebuyers.
Still, according to RealtyTrac, it takes an average of almost two years to foreclose on a home in the Chicago area, so a property listed in Zillow’s premarket inventory could be there awhile before it is officially listed for sale.
The homes listed in premarket inventory are properties for which a foreclosure has been filed against the borrower but the action is not resolved.
"What buyers can learn from this is what homes might be listed for sale soon, or they can actually try and buy the home out of the foreclosure process by making an offer to the owner or the bank," she said.
The dearth of available homes listed for sale is constraining the housing market at a time when there are indications the market has bottomed nationally and mortgage rates remain well under 4 percent for a 30-year, fixed-rate loan.
That so-called shadow inventory has been on the minds of real estate agents for years as they waited for properties in foreclosure to make their way through the process and return to the market for resale.
All the data that Zillow is making available is public information, but until now, accessing it typically required buying a subscription to a website or a trip to county courthouses, digging through individual case records.
Cataloging distressed homes that aren’t listed for sale may make it easier for buyers to approach would-be sellers and strike private deals, avoiding real estate commissions.
The previous home owners fell behind on their payments, the bank started the foreclosure process, the property sold at the foreclosure sale and the bank took title to the property.
It is typical for the seller to pay for the buyers title policy (although HUD and VA do not), but many banks will not pay for the buyers title policy if the buyer chooses their own title company.
Found a bank owned home that is not yet listed, after contacting several people at the bank, can’t find anyone that seems to know about the home or point me to the correct person to send an offer.
Usually the bank gives a buyer 10 days or less to complete the inspection on a foreclosure.
The bank will not take these items out before closing and the homes are sold just as they are when they are listed.
You will need a licensed Real Estate agent to make an offer for you on HUD homes or REOs.
If an appraisal comes in low, then the bank may or may not lower the price for the buyer.
Homes on a bank’s books are called REOs, which is an acronym for "real estate owned." Realize that when banks receive property deeds to homes through foreclosure, it’s because no one showed up on the courthouse steps to bid the minimum amount of the existing mortgage(s).
If you ask your buyer’s agent to search MLS for "REOs," you will probably find that a very small handful of real estate agents specialize in listing REOs for sale in your neighborhood.

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