How to Bid on a Foreclosed House

A foreclosure happens when someone is unable to meet her mortgage payments, putting the home loan in default. When this occurs, the lender will foreclose on the home and assume ownership. If the house is FHA or HUD insured, the United States federal government will purchase the home from the lender and attempt to resell the property. Buying homes in foreclosure can often provide excellent deals for the consumer. With a little research and a skilled real estate agent, buying a foreclosure can help you save a good amount of money on your home purchase.

Difficulty: Easy

Instructions

1. Visit the United States Department of Housing website to examine its foreclosure listings. In addition, contact mortgage brokers to access their lists of properties available through foreclosure.

2. Ask a trusted real estate agent to set up a showing of selected properties.

3. Ask the agent to help you design an appropriate bid for the home you select. He should be able to provide guidance in creating a reasonable offer. You will need to include earnest money with the bid to demonstrate that you are serious about the purchase.

4. Wait the allotted bid period to see if your bid is selected. During the bid period, anyone who is interested in the property can submit an offer. At the end of this predetermined time frame, all offers are opened. The highest reasonable offer is typically accepted.

5. Arrange financing for the home and set a closing date. After the bid is accepted, you will be given a settlement date. You will generally be given 30 to 60 days to accomplish this task. If you cannot close by the assigned settlement date, you will need to pay for an extension or forfeit your earnest money.

Tips & Warnings

• If the property is not sold during the bid period, you can submit bids on the house until an offer is accepted and the house is sold.
• Be careful when choosing a foreclosure listing service online. There are many scammers on the Internet who don't actually have properties for sale, or list other company's properties as their own. The safest bet is to work with government sites or those from a reputable lender such as Citi Group or Fanny Mae.

Resources

• Where to Find Foreclosed Homes
• United States Department of Housing