The steps you will have to take to buy foreclosed homes depends on how they are being offered. In most cases, you can buy foreclosed homes through auctions as well as through an agent. If you want to buy foreclosed homes that are offered via auctions, you will have to bid on them, and the homes go to the highest bidders. If you want to purchase a foreclosed property that is not being auctioned, you will usually make an offer to the property’s listing agent. Once your bid or offer is accepted, you will have to complete sale-related paperwork to finalize the purchase.
The first step in buying a foreclosed home is understanding what foreclosure means. A foreclosure occurs when a borrower defaults on his mortgage and the bank forecloses, or takes back, the property for which he received a mortgage loan. Then, to recoup their money, banks usually try to sell these properties quickly. Since banks are typically very motivated to sell foreclosed homes quickly, you can likely purchase one for a significantly reduced sale price.
It is also important to understand the manner in which you may purchase a foreclosed home. Many foreclosed homes are auctioned off to the highest bidder. If you attend these auctions, you may be able to buy foreclosed homes at a dramatic discount. It is important to note, however, that competition for foreclosure properties is usually fierce. Additionally, you will usually be unable to inspect the inside of a property prior to the auction.
You may also purchase foreclosure homes without attending auctions, as banks may sell foreclosure homes through agents as well. You can view and inspect these properties and then make an offer on the property that interests you. If the bank that owns the property accepts your offer, you can complete the purchase and become the new owner of the foreclosed property.
When you are interested in buying foreclosed homes, you may consider working only with the listing agent. You may assume that this will make the process faster or easier or even save you money. Many experts, however, recommend seeking the help of a buyer’s agent who is experienced with foreclosures instead. In some cases, sellers may refuse offers from buyers who do not have their own agents, and some listing agents may recommend that you find a buyer's agent to represent your interests.
Once your offer or bid is accepted, the process for buying a foreclosed home usually proceeds as it would with any other property. You will have sale agreement papers and other paperwork to review and sign. If you are purchasing through a lender, you will also have to complete loan paperwork and provide documentation to ensure that your funds are ready on time.