If you’re looking to find a great deal on a home (and who isn’t?), you’ve probably considered buying a foreclosure, as a primary residence or as an investment property. While you might get a good price, purchasing a foreclosure home doesn’t come without some extra work.
Here’s a few hints to get you started:
- Foreclosed homes are also called real estate owned (REO) property. An REO property is owned by a bank or lender as a result of the previous owner defaulting on the loan. Other names for these properties would be a foreclosure property or a bank-owned property.
- Finding a real estate agent who works directly with banks that own foreclosed homes will provide you the best access to area houses. A site like ForeclosuresUS.com will help home buyers narrow down their search. Simple searches for ‘REO properties’ or ‘foreclosures’ can also help refine the search.
- Distressed properties are for sale during many stages of the foreclosure process. You might find homes in any of these stages.
- Pre-foreclosure – the homeowner still has control of the property
- Auction sale – you may be bidding against others, including investors
- Real estate-owned (REO) – a lender-owned property
- Government-owned – potentially a slower process with more paperwork
- Since the bank has not maintained the home, there will not likely be any record of repairs or maintenance that would assess the true property condition. The home comes with little room for negotiations and improvements. Similar to buying something ‘as-is’ the buyer will be responsible for repairs and updates.
Ultimately, the goal of combing through foreclosure listings is not to find a house – it’s to find an agent. Banks usually have a few agents who handle their foreclosure properties and these agents will have the insight into newly available homes. The economy will determine how many bank-owned homes you’ll find in your area. During a recession, as many as one-third of homes are sold in foreclosure but in a growing economy you might not find anything worth investing in.
Need help combing through foreclosures in your area? Contact us and one of our real estate agents can help you refine your search.