How to Buy Foreclosed Houses

A foreclosure is a property that has been repossessed by the lending institution for non-payment. These bank-owned homes are available at a discounted price and potential homebuyers can viably purchase these properties from 10 to 50 percent below market value. Buying a foreclosure can be challenging, so it is paramount to work closely with a knowledgeable realtor, diligently research available properties and be sure to have all necessary financing in place.

• Secure a real estate agent, preferably one that has experience in dealing with foreclosures. There are many variables when purchasing a foreclosure and you will need a realtor’s expertise to facilitate this process. A good way to find an agent is to contact your local bank and ask them the name of the real estate companies they use to do their foreclosure sales.


• Get pre-approved. After you have found your real estate agent, you must obtain a pre-approval letter from your lender, unless you are purchasing the home with cash.  This is a signed letter from the bank that guarantees all parties, i.e., agents, sellers, and banks owning the foreclosure properties that you have been pre-approved for a mortgage.


• Search for homes. Look at homes that fit your requirements and utilize your realtor’s resources and listings to aid you. Also, check your local newspaper for auctions, the Internet and the county clerk’s office, which will have a notice of default for all foreclosures in a specific area.


• Decide on a house to purchase and have it inspected by a professional.  Since foreclosures are offered "as is," meaning the bank makes no guarantees regarding the condition of the property, there may be unforeseen problems with the home and getting it inspected is the best way to spot any problems.


• Research the property at your local courthouse. There can be unknown issues with the home’s title, such as back taxes and liens. As the purchaser of the house, you are responsible for debts against the property, and lien holders can seize the house as collateral.


• Make an offer on the home once you have had it inspected and confirmed that the title is clear. Your real estate agent will guide you through this process being that there is more paperwork involved with a foreclosure than with a conventional purchase. If your offer is accepted, you have just become an owner of a property at a substantial savings.