How to Buy Foreclosed (REO) Homes to Live In, or to Make A Fortune "Flipping"!
No books to buy, no subscriptions to foreclosure listings, just good old fashioned FREE information
Introduction: When you buy a foreclosed home, you're cashing in on a home someone was no longer able to pay for. Foreclosures are difficult--both to locate and to execute the transactions--but the potential to turn them over for a tidy profit, or to get a great home to live in may be there.
Step One: Understand that foreclosure means that because a home owner has become unable to pay the mortgage, the lender takes back the property. The legal steps involved differ from state to state. That means you need TRUE professionals on your side: Both your Realtor and your Loan Officer (about Joe)
Step Two: Investigate the advantages. Since a bank or other lender wants to recover as much of its investment as quickly as possible, foreclosed homes are often unloaded at significant discounts-- upwards of 30 percent or more.
Step Three: Get Pre-approved with a lender experienced in buying foreclosure bank owned properties. This is NOT the time to simply call a bank and use any Loan officer who answers the phone, or shop the internet for the guy quoting the lowest (usually fake) rate. This step is EXTREMELY important as banks REQUIRE detailed approval letters from known reputable lenders before even thinking of looking at any offers! MANY MANY deals far apart because of in-experienced lenders. Don't let that happen to you.
Step Four: Find an agent experienced in foreclosures. Sellers won't accept offers from unrepresented buyers. Now is NOT the time to use your neighbors sister who got her real estate licensed a couple months ago! We can help you find the right agent!
Step Five: FIND PROPERTIES. We suggest working with an experienced real estate agent. But you can search for foreclosure listings in real estate magazines, newsletters, newspapers and Internet search engines. Call lenders for real estate owned (REO) properties lists of foreclosures. Government agencies such as Fannie Mae (fanniemae.com) and the Department of Housing and Urban Development (hud.gov) also advertise foreclosed homes for sale. Check public records for other leads. A lender deciding to foreclose must file a notice of default in the local county clerk's office
Step Six: Tour the property and inspect it as closely as possible. Some foreclosures--unlike fixer-uppers--are in fairly good shape. Others may be behind in maintenance
Step Seven: Have your agent check nearby or comparable homes to see if the asking price for a foreclosed home is, in fact, a bargain. Check to see if a foreclosed home has any liens on it, such as unpaid property taxes. Find out who is liable for those costs.
Step Eight: if all looks well so far, Find out if there is a listing broker and make an offer.
Step Nine: When buying a typical home, you can make an offer and usually hear back quickly. On a foreclosure, BE PREPARED TO WAIT. it is NOT unrealistic to make an offer and not hear back from the bank for weeks! Be prepared to deal with more paperwork with a foreclosure than you would with a conventional purchase, particularly when a government agency is involved
Step Ten: Once your offer is accepted - Have the home inspected if the seller allows. Some sellers include this as part of the sales agreement, but the buyer still pays for it
Tips & Warnings
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