Buying a foreclosed home can be a lucrative deal. When a seller needs to get rid of his or her property, they usually do so at a significantly reduced price. This is because they are at risk of going into foreclosure, or the bank has already started the process but is giving them a chance to sell before they take the home.
Foreclosures can be sold using three different methods:
- The borrower sells the home to a third party during pre-foreclosure and uses the money to pay off the loan.
- A third party purchases the home at a public auction. This usually happens once the home has been foreclosed on.
- The lender sells the home after taking possession from the borrower.
Step 1: Locating a Property
The first step to buying a foreclosed property is finding one in a pre-determined geographic location. Our tools are here to help you find foreclosed homes in Greater Lansing that you like.
When looking at the property details, you should always see the address of the property, the name of the owner and the name of the lender who is involved, if the situation calls for it. You should also be able to see what the unpaid balance is on the loan. This number is often set as the starting bid amount.
Step 2: Obtain Financing, If Necessary
Obtaining financing is normally the first or second step in the process. Once you’ve located a few areas or properties that you’re interested in, head to the bank to see how much you can afford.
You must obtain financing before you put in an offer with whomever controls the foreclosed property. This will let them know that you’re serious about making the purchase and have the financials to secure the property when necessary.
Step 3: Get in Touch With Us
Depending on how far the foreclosure process has come, the property may or may not be listed by the original lender.
Finding properties in pre-foreclosure can yield great discounts. However this involves approaching the current occupant/borrower and making an offer. Many times these owners are disgruntled or upset with their lender and do not take kindly to this. Sometimes though the potential upside for the seller is that he or she will be able to walk away from the situation without foreclosure on their credit report.
If the pre-foreclosure process has passed, you’ll have to purchase the property at public auction. While the best bargains come at this time, buyers are required to pay cash for the property at the auction, and the process leaves little to no time to perform research on the title.
Purchasing a foreclosed home can often be more difficult and confusing than buying a home through a regular sale. Hire a real estate agent to help you navigate through the paperwork and negotiate a fair buying price.