how to buy foreclosed homes

"A lot of people don’t realize [that] foreclosures are heavily regulated and every state has its own set of laws," says Alexis McGee, the president of Foreclosures.com. "If you don’t have the language proper in your contract, or if you have even the font size wrong, it’s criminal and civil damages—don’t count on every Realtor knowing this." As such, McGee advises against relying on a agent for legal advice.
"In today’s uncertain times it’s important to be working with someone who has been through market cycles before," says Patrick McGilvray, president of TheHomeBuyingCenter.com, which links homeowners and owners of real estate with potential house buyers.
With so many foreclosures on the market, "this is a once-in-a-generation opportunity for many people," says Steve Dexter, a foreclosure expert and author of the forthcoming book Buy and Hold Forever—Building Real Estate Wealth Far Into the 21st Century.
Since many foreclosed homes may decline further in value in the coming months, it’s important that buyers approach the transaction from a long-term perspective." If you are not looking at a piece of foreclosed property from a 10-year time horizon—as an investor or as an owner occupant—then you will likely suffer," McGilvray says.
Only investors with the resources and patience for a long-term real estate investment and homeowners who can afford a fully amortized fixed-rate mortgage should consider buying foreclosed property, McGilvray says.
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.
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.
To find foreclosures, you’ll want to work with an experienced real estate agent who has access to local multiple listing services and can pinpoint the potential deals for you.
At this point, the home is known as REO – real estate owned property by a bank or lender.
The bank will likely hire a local real estate agent to put it on the market.
Buyers can expect a discount of 10% to 25% compared with buying a home through traditional channels, says Dean Street, an agent and 30-year veteran of foreclosure buying in the western U.S. But the road to auction can be bumpy, too.
Another hassle: Most foreclosures that go to auction get postponed, usually due to bankruptcy or loss mitigation (when the bank tries to compromise with the borrower), says Chris Matty, marketing director of ForeclosurePoint.com. He notes that opening bids also change frequently, especially as home values are marked down further.
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Through the real estate community, the agent representing a potential buyer of the property after it had been foreclosed upon got her hands on the old inspection report.
REO stands for “real estate owned.” An REO property is one owned by a bank after going through the foreclosure process.
Bringing more than a decade of residential real estate experience, DeSimone is a recognized national real estate expert and has appeared on top media outlets including CNBC, Good Morning America, HGTV, FOX News, Bloomberg and FOX Business.
The MLS is fully accessible for any real estate agent, so it is highly recommended that you either get your own real estate license or work closely with an agent you like and trust (after all, a real estate agent is generally paid by the seller, so it’s free for you to use an agent!) However, you don’t need to only rely on your real estate agent to tell you what properties are listed – because you can generally get that information online through many different websites such as Realtor.com, RedFin.com, Zillow.com, or Trulia.com. These sites will help you sift through nearly all the listings and give you at least some of the information about the property.
Buying a property during this period known as “pre-foreclosure” is a common technique used by many real estate investors and can be a good way to find motivated homeowners.
This process is known as the “Trustee Sale.” The bidding generally opens with an automatic starting bid of whatever amount is owed on the property, so no – it’s generally not possible to simply go and bid $1 on a property at the courthouse.
Cash Only – Finally, when buying a foreclosure at the courthouse steps, you will need to have all the money the same day to purchase this property.
"So the bank recoups a little more money and the new home buyer gets a property that’s fresh and they don’t have to do a whole lot to it," Mattison added.
Last year, across the country, houses that had been through foreclosure sold for an average of 28 percent less than other houses.
How would you like to knock tens of thousands of dollars off the price when you buy a home? You can do just that if you buy a foreclosed property.
The stereotypical foreclosure property has been neglected, even trashed, but there’s a flip side.
(A short sale occurs in lieu of a foreclosure, when the lender allows a homeowner behind on payments to sell her house for less than the loan balance.) Bridge is a certified distressed property expert, gaining her certification through a program run by the Charfen Institute, which provides training for real estate professionals.
Foreclosed houses often are sold "as is." But an inspection still is worth it, "so even if you’re buying as is, you know what you’re getting into," said Steve Morgan, general counsel for the Colorado Association of Realtors.
The process for buying a foreclosed home from the lender should start the same way it does buying any home, said Walter Molony, spokesman for the National Association of Realtors: Find a knowledgeable real estate agent.
The vast majority of foreclosed houses will be vacant, said Frank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C. That usually makes it easy to tour the house and hire an expert to see what work is needed to bring it up to your standards.
"Sometimes the property could still be occupied and the owner (or) renter probably isn’t too happy about leaving,” said Tyrone Adams, director of communications and events for the Colorado Association of Realtors.
"I think the buyer of a foreclosure must have a buyer’s agent," said Roxane Webster, a real estate agent and buyer broker with Keller Williams Realty in Greenwood Village, Colorado.
On the Property Details page, RealtyTrac usually provides the estimated market value and the estimated balance of the loan in foreclosure, called either the Balance, Opening Bid or First Loan Amount.
On the Property Details page, click on the Comparable Sales section to view a report that evaluates the home’s market value based on comparable sales in the neighborhood.
On the Property Details page, click on the Comparable Sales section to view a report that evaluates the home’s market value based on comparable sales in the neighborhood.
On the Property Details page, click on the Comparable Sales section to view a report that evaluates the home’s market value based on comparable sales in the neighborhood.
Subscribers can click on the Contact An Agent tab on any member page after you log in or click on any corresponding links on the Search Results or Property Details pages.
The quickest way to make contact with the owner using RealtyTrac is to click on the “Contact Owner” link on any Property Details page to send a postcard to the owner.
Contact an Agent to find a local real estate agent in the RealtyTrac Agent Network who can help you contact the lender and who can check if the property is already listed on the market with a real estate agent.
Many government-owned properties are already listed with a real estate agent, and you should see a link to contact that agent in the Contact section of the property details page.
The Property Details page should always include the address of the property and the name of the owner, trustee or lender involved with the foreclosure, depending on the property status.
If the lender or government agency takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender usually sells the property to recover the unpaid loan amount.
If the property is Bank Owned (REO), your first step is to contact the lender, whose information is usually on RealtyTrac’s Property Details page.
Click on the Check Loan & History section to view a report that lists additional loans or liens on the property.
Subscribers can click on the Get Financing tab on any member page after you log in or click on financing links on the Search Results or Property Details pages.
If you’re a first-time homebuyer and you’ve never purchased a home, let alone a foreclosure property, it is beneficial to contact a local real estate agent who can guide you through the process of buying a foreclosure.
The first step is to call the trustee or attorney listed on the Property Details page to confirm if the property is still in foreclosure.
Click on the Loan & Lien History section to view a report that lists additional encumbrances on the property.
Click on the Loan & Lien History section to view a report that lists additional encumbrances on the property.
Click on the Loan & Lien History section to view a report that lists additional encumbrances on the property.
To determine the property status on RealtyTrac, look at the Foreclosure Status gauge on the Property Details page.
On the property details page, you can click the “Save Listing to My RealtyTrac” link to save the property to the My RealtyTrac page.
If this is the case, you’ll see a “Bid Now” button on the search results page and “Bid Now” links on the property details page.
To use this feature, click on the “History of Notices” link on the Property Details page (under property photo).
To get an estimate of the potential bargain for any property, you need to find out the estimated market value of the property, how much is owed on the property and if the owner has any other loans or liens encumbering the property.
Click on Lien & Loan History to view a report that lists additional debts encumbering the property.
Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan.
If the trustee confirms the property is still in foreclosure, and you believe the property could be a wise investment, you should contact the owner in default as soon as possible.
You’ll see a link to do this either at the top of the property details page or in the Contact section of the property details page.
RealtyTrac’s Xamine tool can be accessed by clicking “What’s Next>Evaluate The Property” on any Property Details page.
If the owner does not respond to a postcard you can try to send another postcard (the owner may have a change of heart as the end of the pre-foreclosure period approaches) or you can wait to see if the property is scheduled for auction and attend the auction.
RealtyTrac’s Xamine tool can be accessed by clicking “What’s Next>Evaluate Property” on any Property Details page.
The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction.
Click on “Check Comparable Sales” to view up to 15 recently sold neighborhood properties and an analysis of property values in that neighborhood.


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