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Step 1
Locate distressed properties through state, local and government agencies (HUD, Fannie Mae, Freddie Mac and the Veterans Administration). You can also find properties through Internet subscription services such as ForeclosureListings.com, banks, credit unions and real estate agents who specialize in distressed properties (see Resources below). Most have designated representatives or departments that handle foreclosures.
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Step 2
Contact the real estate agent or lender regarding the foreclosure you are interested in purchasing. He will have valuable information about the property, including the terms for pricing, down payments and possible interest rates.
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Step 3
Inspect the property with a professional. Although this opportunity is not always available, when it is, have an inspector check for all defects that can affect the value of the investment.
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Step 4
Attend foreclosure auctions, which are constantly being held at sites all around the country. Before you go, you should have already viewed the list of homes that will be auctioned that day and visited the ones that interest you. You will also need to pay a deposit (usually 5 percent) by cash or cashier's check at the time of the sale. Locate nearby auctions at a site like USHomeAuction.com (see Resources below).
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Step 5
Evaluate the total cost associated with the property before you buy. In addition to the price of the property, you must also consider repairs, insurance, property taxes, liens and the amount you will be able to recoup either through the future sale or rental of the property.
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Step 6
Make an offer to the lender based on your analysis of all costs associated with the ownership of the property. You must also consider that other investors will likely be presenting offers. You should take care not to overpay for the desired property, while still making a competitive offer.
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Step 7
Decide on how you will finance the property. In some cases, there will be on-site financing available and you will deal with designated lenders, or you will need to go to a bank, credit union or mortgage company for you loan. However, if you want to become a regular investor, it's a good idea to establish a business or personal line of credit that you can access immediately, as foreclosures are often "cash-only" deals, and time is of the essence.
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Step 8
Make certain that property you want to buy has a clear chain of title. Many properties may have had liens placed on them for which you may be responsible. You can check the chain of title yourself by visiting the local county clerk's office and requesting the appropriate documents (fees may apply). However, in most cases, you should utilize the services of a title company, such as Nationwide, to investigate the possibility of liens (see Resources below).
Comments
hi2ufrmdeb said
on 4/2/2009 Great info. I'm trying to buy me something right now.
linkart said
on 4/2/2009 Well-written overview of how to buy foreclosed homes. There are certainly lots of possibilities in today's market. 5*
nccu9902 said
on 3/31/2009 Superb article.
nessy1111 said
on 3/31/2009 Great way to flip homes and make a lot of money doing it. Thanks for the article. Here's another good resource. http://forvamortgages.info/p_3389/Search_Results.html?ss=buy foreclosure
Peggysue said
on 3/31/2009 Very good info. I know some people who have purchasedforeclosed property and have fixed them up and now they have them rented. Very good article. 5*