Bank Foreclosure List

How to Buy A Foreclosure

So, you've found the perfect foreclosed property to buy. It's a beautiful house in a good neighborhood at an unbeatable price. You definitely want to get this house. Yet, you've never bought a foreclosed property before. How is it different from buying a regular property. You need to know how to buy a foreclosure so you can make that house your own.

There are typically two ways to get foreclosed houses.....through a bank auction or from the bank itself (if the auction wasn't successful). Auctions happen soon after the bank takes back possession of a house from a mortgage defaulter. Sometimes lots of people show up to bid on it on the court house steps, while other times, not one person comes to bid. The important thing to remember is that upcoming auctions are always advertised in the local classified ads at least a week or two before they happen. Depending on your state, the auction may be on the steps of the county court house, or at the foreclosed house itself. Some states even allow you to bid online.

To get these houses, you need to have financing already in place before you go to the auction, as you'll be asked to put up an earnest money deposit if you win, and you'll have to show proof of approval for a mortgage before you'll be allowed to sign any contacts on the house. Depending on the area in which the auction is being held and the condition of the house, you may find that some houses can sell for less than $1,000. At the very least, you can almost always be assured of a good deal when you buy a foreclosed home at auction.

The next way to buy a foreclosed house is directly from the bank. These are called bank-owned properties, or REOs. These are houses that did not sell at auction and are now owned directly by the bank. The banks are eager to get rid of these properties, as maintaining them costs the bank money. Bank managers often don't care if they make a profit on the sale of the house, or even lose money on it. They just want it off their books so it stops being a financial drain on their institution. You can negotiate directly with bank officers on the prices of these houses, and many banks are willing to go down in price considerably just to get rid of the property. Remember that, and you can always find a good bargain when you know how to buy a foreclosure.