How to Buy a House in Foreclosure

The topic “how to buy a house in foreclosure” is two fold. The first, some might have come here looking for information on how to find houses in foreclosure as either an investment deal, or a way to save money on a second home, where the second is for those who have found a house in foreclosure already and want to know how to purchase it. We’ll cover both topics in this article, starting with the actual “how to purchase a house in foreclosure” meaning one you’ve already found.

The top advice we can give you is to use an agent experienced in dealing with foreclosures. Some sellers won’t accept offers from unrepresented buyers, and also your agent can save you a lot of headache while reducing risk. For example, when buying a home in foreclosure you’d better have a title search done, otherwise you could end up thinking you’ve just bought a home by paying off a $50,000 mortgage, only later to find out it was a second mortgage and you’ll need to pay an additional $150K to take ownership. Also you’ll need to research any liens the property might have and find out who is responsible for them, should you purchase that home. Simply put, make sure to do research and find an experienced agent recommended by someone you can trust, before purchasing foreclosures.

The rest of this article will focus on the second topic which is actually finding foreclosures.

Finding a House in Foreclosure

Foreclosures are out there everywhere, and like every other thing that has a price attached to it, there is a market. An obvious result is that there are good deals which must be discovered through patient research and education, and there are bad deals, as well as outright scams. The purpose for this page is to get the person looking for “how to buy a house in foreclosure” off to a good start. We then recommend that there should be no rush. Once a person begins to tune in to an idea, the initial investments of time and homework will provide the most successful result.

What to look for

First of all, you want a nice house in a good neighborhood, because as any realtor will tell you, location is of utmost importance. Keep this first in mind, and then find sources of foreclosures. That way, not only will you find the best price, but you will have a house that can be resold if necessary. Next, you want to find the available foreclosures. There are some good websites out of the many available, and some offer 7 day free trials. Make sure the site has a good reputation and is well managed, then begin your search. It’s for you to decide within these 7 days if the site is giving you the listings that you want. If not, try another 7 day trial membership site. If you do find a site that you like, it can be worth paying for the membership, as they will do the work of finding the foreclosure listings, providing you with a valuable service. Other places to look are in newspapers and with lenders and realtors.

Note: No where in our “how to buy a house in foreclosure” guide do we advocate blindly spending money on a website that charges for access to foreclosure listings.

How it works

Obviously, someone was in financial difficulty. The bank or lender generally understands and works with the troubled client in the beginning, but eventually there is a foreclosure. The lender then is not in the business of ownership and wants to liquidate – offload a bad debt. This is most often done at a discounted price. The first price will usually be at a small discount of 10 to 15 percent, depending also on the number of such properties available. When a foreclosure is not selling, however, the price may be greatly reduced.

Other terms

A search of terms in Wikipedia such as REO and short sale (real estate) can lead to further useful information to add to the knowledge you will obtain from our pages. Here we make it easy to get you started. See our other pages and take the time to understand how to buy a house in foreclosure.

For an interesting article of a problem that can occur if you do not fully understand the foreclosure process, and again we urge you to take your time to familiarize yourself with the many aspects of buying a home in foreclosure click here.