What You Need to Know About Buying Foreclosed Homes
If you need to know how do you buy a house in foreclosure, here are the things you need to know.
The topics I’ll cover today are:
- Deciding How Much to Spend on a Foreclosure Property
- Where to Look for Foreclosure Properties
- Buy a Foreclosed Home in the Neighborhood You Want
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Deciding How Much to Spend on a Foreclosure Property
Buying a foreclosed home is a good way to get a house, often at below market value, but before you begin investing, there are some things you need to know about how do you buy a house in foreclosure.
The very first step to take is decide how much to spend. Zillow says to know your own finances. This is Important. You have to know how much you can spend and stick to that.
You’re buying a home and you want to either keep it to live in or rent or flip it for a profit. To do that, you’ve either got to pay for it with cash or be able to afford loan payments.
If you can get pre-approved for a loan, so much the better. You can walk into the sale knowing how much you can spend and the seller will know the money is available. You can often get pre-approved for a loan at the same bank from which you buy a foreclosed home.
Where to Look for Foreclosure Properties
With an amount in mind, start looking for properties. There are three primary ways to do this:
- Foreclosure auction. When a bank forecloses on a property, it has to run a foreclosure notice in the newspaper. This legal notice will give information about the property and most importantly when the foreclosure sale takes place. The sale is an auction, typically held at the county courthouse. Be sure to show up for the auction. You can’t buy the property if you’re not there to bid.
- Real estate agency. Foreclosed homes which the bank took in after the auction are often listed with real estate agents. The bank is interested in selling the property as soon as possible. Hiring a person or company whose business is connecting home buyers and sellers is just sound thinking. In a series of tips on how do you buy a house in foreclosure, Bank of America connects with a real estate agent. Some agents specialize in helping you learn how do you buy a house in foreclosure.
- The bank. Banks keep a close eye on the mortgages they hold. They cannot tell you which mortgages are in danger of foreclosure until the legal notice is published. But you can tell them you are interested in buying a foreclosed property. The bank can’t directly sell you a house where the mortgage is in default; it has to go through a public auction. But the bank can tell you when a property is in foreclosure proceedings so you can make plans to attend the sale. Once the foreclosure goes through, you can buy direct from the bank.
Buy a Foreclosed Home in the Neighborhood You Want
The next step is linked closely to looking for property. Decide where you want to invest.
The Zillow report says, “Target a specific neighborhood or two to avoid becoming overwhelmed by listings. Ask your agent to notify you of listings within these neighborhoods that meet your other criteria, such as size and cost. Check comparable recent sales to get a good feel for the market.”
Property inspections are a good idea. You may not be able to do this in all cases. Inspecting the property before a foreclosure sale at the courthouse can be difficult. Technically, the homeowner with the default mortgage still has property rights. You’ll need the owner’s permission to look inside the house.
If the house has been foreclosed, you need the bank’s permission to look inside. Expect to do some repairs and figure this into your offering price. That is just part of investing when you learn how do you buy a house in foreclosure.
We hope you enjoyed Ted’s lesson on how to buy a house in foreclosure.
The first step is determining how much you want to spend, then you need to locate a property.
You can find foreclosed homes at foreclosure auctions. You could also receive help finding foreclosures from realtors and banks.
As always with real estate, location is important. Be sure to vet the neighborhood as well as the property before purchasing.
If you’d like to know more about distressed real estate investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
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Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.