How To Purchase Foreclosure Homes

People who purchase foreclosure homes are essentially cashing in on a property that someone else was no longer able to afford. These properties are difficult - both to execute the transaction and to locate off the bat - but offer the potential of a pretty profit if you’re interested in the investment game. In this article, we will walk you through the process involved in foreclosure homes purchases.

Step 1 - Keep in mind that foreclosure refers to a property where the prior owner has stopped paying the mortgage. As such, the lender has taken control of the property. The steps involved in a purchase of this type vary from state to state.

Step 2 - Take a look at the advantages associated with the purchase. Because the lender is interested in recovering the most out of their initial investment, in as short an amount of time as possible, these properties are typically sold off at prices significantly less than the going rate.

Step 3 - Locate a real estate agent with experience in foreclosed properties. Some sellers choose not to accept bids from buyers who are unrepresented.

Step 4 - Look for local listings in real estate magazines, online and in newspapers. Call around for REO property lists. Take a look at public records for additional leads and keep an eye on your surrounding neighborhood. Often, homes will be vacant for sometime before becoming available. If you are quick to put in an offer, you can be into your new property in no time.

Step 5 - Once you’ve found a property you’re interested in, make an appointment to tour and inspect it. Some of these properties are actually in wonderful shape! Other’s may require a little TLC. Determine what you are willing to invest into the property and whether you are planning to live there or make a quick buck.

Step 6 - Get in touch with your agent and have them check into homes nearby to find out whether the price on the property is actually a deal. Patience is key. Don’t expect to find your dream home on your first try. In some cases, it may take a few months to find your ideal match. Avoid settling for something that you will regret down the road.

Step 7 - Inspect your credit report and be sure to correct any outdated material or mistakes. Get yourself prequalified for your lease. Prequalification is required in some areas but not all. Find out what your state requires and proceed accordingly.

Step 8 - If there is a listing broker, make an offer on the property.

Step 9 - Find out whether the property has any liens against it. If, for example, there are unpaid property taxes, be sure to determine who is liable.

Step 10 - if the seller permits, make sure to get the home inspected. Many sellers will actually include this as a part of the sales agreement. Sometimes the buyer pays, other times it’s the seller.

Step 11 - Be aware that a foreclosure comes with much more paperwork than a regular property sale. You may be icing that wrist for a few days afterward.