| Knowing how to buy a foreclosure home is important | | | | buyers who will live in them for at least a year, so it's a |
| if you want to get really into the real estate market. It | | | | good opportunity if you're a first-time home buyer. If |
| is not the same as going through the ordinary process | | | | such a buyer can't be found, the sale is opened up to |
| of house purchase. | | | | anyone including investors and "flippers". You can place |
| In order to know how to buy a foreclosure home, you | | | | a bid by working with a HUD-approved real estate |
| first need to know what type of property you are | | | | agent, as long as you submit a deposit with your bid. |
| looking for. The term "foreclosure home" is actually a | | | | The houses sell quickly and settlement often takes |
| vague one covering properties in various situations, or | | | | place within weeks - so again, you need to secure |
| various stages of the foreclosure process. | | | | your finance in advance. The thing to remember is that |
| - Pre-foreclosure homes. Pre-foreclosure homes are | | | | the homes have no warranty and are sold "as is". So it |
| properties on which a notice of default has been | | | | is essential to have a thorough inspection carried out |
| served, but which have not yet gone to foreclosure | | | | before you place your bid. |
| auction. During this period, the owner still has the right | | | | - REO homes. If a property fails to sell at a |
| to dispose of the house and is often desperate to do | | | | foreclosure auction, its title passes to the foreclosing |
| so. You can find these by looking for notices of default | | | | lender. It is then known as as REO (real estate owned) |
| or of impending foreclosures in public records offices. | | | | property. The bank will ensure any occupants are |
| There is nothing to stop you from contacting the | | | | evicted and then place the house on the market. If you |
| owner yourself and making an offer to buy the | | | | want to get in quickly with one of these, a technique |
| property. Find out how much is owing on the property | | | | which has been known to work is to identify your |
| and estimate what the cost of essential repairs, | | | | property at the auction and photograph it, then |
| outstanding taxes and liens etc. will be, in order to | | | | immediately send a FedEx overnight letter to the |
| calculate the net equity in the property. Your best | | | | headquarters of the lending bank, enclosing a deposit |
| chance of a profitable deal is to make an offer of 50 | | | | check and offering to buy the house. If the house is in |
| percent of the net equity, "subject to" the existing | | | | bad condition, use the photograph to point out how bad |
| finance remaining in place. Remind the owners that | | | | it looks. This is not guaranteed to work, but it often |
| once the property goes to foreclosure sale, they will | | | | results in the bank accepting your offer or at least |
| get nothing - so it's a win-win deal on both sides. | | | | making a counter-offer. As lenders are not landlords or |
| - Properties at foreclosure auctions. This is where you | | | | realtors, they usually want to get the property off their |
| will find the most competition, from all sorts of people | | | | hands as quickly as possible. |
| including seasoned foreclosure investors. It is also risky | | | | - Abandoned homes - tax foreclosures. Sometimes |
| as you have no opportunity to inspect the property. | | | | the owners of a property will abandon it when they |
| Make sure you have your finances in place before | | | | know foreclosure is imminent. Once a property is |
| you place a bid. If you make the winning bid, you will | | | | deemed to be abandoned, it will be sold by the |
| have to pay the full amount by cashier's check at the | | | | municipality or town in order to try to recover the |
| end of the auction - so don't get carried away. And | | | | taxes owed. This can potentially be a very profitable |
| don't expect to use your credit card - you won't be | | | | investment, but it is essential to carry out a thorough |
| able to. | | | | title search and to check whether there are liens or |
| - HUD homes in foreclosure. A HUD home is a | | | | other debts outstanding. |
| property that has been acquired by the US | | | | The question of how to buy a foreclosure home |
| Department of Housing and Urban Development | | | | depends on what stage of foreclosure the property is |
| (HUD), as a result of the owners defaulting on a | | | | at. The transaction can potentially be a profitable one, |
| mortgage that was insured by the Federal Housing | | | | but it is essential to go about it the right way so as not |
| Administration (FDA). The homes are initially offered to | | | | to lose your money. |