If you are looking to buy a home, a foreclosed property can be an economical option, and statistics indicate it may be fairly easy to find one. According to the U.S. Census Bureau, 4.6 percent of home loans were in foreclosure as of 2010 and that number had risen for five straight years. While it might be unnerving to consider moving into a foreclosed home, you can reap great rewards if you exercise some due diligence.
Hire a real estate agent to help you through the entire process. There are many who specialize in foreclosures, and a simple web search should help you pinpoint one in your area.
Get preapproved for a home loan, if you will need financing for the transaction. In this phase, a prospective lender will verify your income, check your credit and make some guarantees regarding loan amounts you would qualify for. Often, banks are looking to get rid of foreclosures and the quicker you can make the process, the better off you'll be.
Find a property you'd like to buy. Foreclosures are listed for sale through the usual real estate channels, including Internet and newspaper listings. Unlike a regular property, however, foreclosures may also be sold at auction. Foreclosed property listings can be found on some counties' websites and may be broadcast through public notices. Talk to your agent to help you through this process.
Make an offer on the property you wish to buy. The offer can be made during an auction or directly to the bank, depending on the property. Make the offer contingent on a full home inspection.
Schedule the home inspection once your offer is accepted. Often, foreclosed homes are sold "as is," meaning you cannot ask the bank to do work to the property prior to closing. In this case, an inspection is still important as it represents an opportunity for you to assess your prospective purchase and a window in which you can back out of the deal.
- While it is possible to purchase a foreclosed home at a bargain, don't expect to pay much less than the listed price. Typically, banks are motivated to sell the properties quickly and will price them fairly.
- Offers made on foreclosures may take longer to get approved than in a typical deal. In addition to the bank, there are sometimes other parties involved that may need to approve the deal.
- Always have a home inspection done. This is especially important when it comes to foreclosed properties, which may have been neglected and are typically not cared for while in possession of the bank.
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