How To Buy Foreclosures

Buying foreclosures gives you the opportunity to pick up a bargain property. Knowing how to buy foreclosures is something you must pay close attention to as the process can differ slightly from buying a regular home or property that is for sale.

What is a Foreclosure?

A property is foreclosed when the lender or mortgagee forces the sale of the borrowers property in order to recoup the debt owed. This generally occurs when the home owner can no longer meet the repayments on the mortgage. In the past year or so the US has seen more properties than ever being sold as foreclosures. Although this is unfortunate for the owners, buyers will reap the advantages of buying properties for well under their normal market value.

Types of Foreclosed Properties

Once you start researching how to buy foreclosures you'll come across a few different types of property statuses and opportunities to buy. These include buying at a public auction, buying bank owned properties and buying during the pre-foreclosure process.

How To Buy Foreclosures

The steps to buying a foreclosure can be outlined as follows:

1. Find the property you wish to buy
2. Get Financing
3. Contact the agent
4. Contact the seller
5. Make an offer via a real estate agent

These above 5 steps are just a brief outline to what occurs when you are buying a foreclosed property. Each step consists of many smaller steps and the process that you are buying through (eg via auction, pre-foreclosure) etc will determine exactly what you need to do to obtain the house you want.

Bank owned properties are considered relatively safe to buy and the can have less costs involved as they normally do not have taxes or liens. You should still consider the costs though even if the house seems very cheap. If it is an investment, will you have trouble renting it out?

It is always wise to seek professional help and advice regardless of the type of property you are buying. The process can be daunting if it is your first foreclosure experience, however the benefits are endless as you can literally buy a home for up to half of what it was valued at in the past.

[ First posted on 12/18/2009 by Manuel Viloria ]