Buying Houses in Foreclosure
It may be difficult to find bargains in the real estate market. However, it may still be possible for deals to be found on properties in foreclosure or following foreclosure. Typically, for someone interested in buying a house in foreclosure, three opportunities to purchase arise:
- buying a house from the owner before the foreclosure auction;
- buying a house at the foreclosure auction; and
- buying a house from a lender following a foreclosure auction.
Buying a house in foreclosure or following foreclosure is a somewhat complicated proceeding that requires research and diligence on the part of the buyer.
How Can I Find Information about Houses in Foreclosure?
- Check the classified section of the newspaper, as well as the auction notices.
- Consult with your realtor and advise him or her that you are interested in purchasing a property in foreclosure.
- Contact lenders in your area to determine if they offer lists of houses in foreclosure to prospective buyers.
- Contact the United States Department of Housing and Urban Development or the United States Department of Veterans Affairs regarding foreclosure of federally-backed loans on houses.
General Considerations in Purchasing Properties in Foreclosure
As an initial matter, you will want to find out as much as you can about the house you are interested in purchasing. If at all possible, make it a point to inspect the house to determine its condition, as well as the need for any repairs. Furthermore, it is important to examine the title to the house to determine the existence of any outstanding liens or encumbrances. Gain a clear understanding of the worth of the house based on recent, comparable sales.
Consider how you will finance your purchase. Is the current loan assumable? How quickly will you be required to pay the full purchase price?
Lastly, and most importantly, it will be necessary for you to become familiar with the laws governing the foreclosure of homes in your state. A foreclosure proceeding can be somewhat complicated; therefore, a clear understanding of the law is essential. The laws vary from state to state.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.