How to Buy Homes in Bankruptcy

With home foreclosures at a record high and banks trying to unload real estate from their portfolios, now is the perfect time to buy a house out of foreclosure. Banks are willing to sell houses in their inventory at up to a 40 percent discount from market value. This is an unthinkable deal; however most people are not comfortable or confident enough to venture into the world of foreclosures. To begin your search to buy a home out of bankruptcy, follow these steps.

Instructions

1. Get pre-approved for a loan. Before you start the search for a new house, you need to find out what kind of loan you can obtain and how much you can borrow. In today's market, banks are placing more requirements on borrowers and are tightening their credit policies. Find out what restrictions a lender might place on you and the amount of money you can secure for your home purchase.

2. Make a budget and decide where you want to live. One of the biggest mistakes you can make is to purchase a home that is more than you can afford. The previous owner of your house will have gone into bankruptcy, and you want to avoid that. Make wise decisions and stick to your budget. Also decide on a geographic area to make your home search easier. You will need to know these factors to narrow down the list of homes in foreclosure to those in which you are interested.

3. Find a Realtor. A Realtor will be essential to your home-buying process when working with homes in foreclosure. Although you can purchase a membership with a bankruptcy listing site in order to obtain lists of houses in foreclosure, this will not be a free service. (See buybankhomes and foreclosurestogo. See Resources for link.) Furthermore, it will be useful to have a Realtor advocating for you and who will be able to find out where a home is in the foreclosure process. Having professional advice will be important, and in most cases the bank will even pay your Realtor's commission.

4. Look at whether there are liens on the property. You want to make sure you will be getting the property free and clear once you purchase the home. If there are liens on the property other than the bank from which you are purchasing the home, have your attorney take a close look at this and take the liens into account with the purchase offer.

5. Visit the property. Although you will not be able to enter the property or have the home inspected in most cases, you will still be able to look at the property from the outside. Be sure to contact the neighbors surrounding the house as well to ask them of their opinion of the house. This way, you will get a better idea of what the home is like on the inside. Decide if you think major repairs will be needed, and estimate the cost.

6. Make an offer. Your offer should be made, in most cases, to the listing agent who is acting as the go-between between buyers and the bank. Otherwise, you can contact the bank or asset manager directly. If you do not feel savvy enough to contact these people directly, or if you used a real estate agent to find your foreclosed home, your broker can deliver the offer.

7. Hire an attorney. You will want an attorney to go through the paperwork to ensure there are no problems with the process of purchasing the house from a bankruptcy. The attorney will also walk you through the procedure of buying the house and let you know what the state law requires regarding taking the house out of bankruptcy. For a list of attorneys, visit Find Law. See Resources for link.

References

• The SafestWays toBuy Foreclosures

Resources

• Buy Back Homes
• Foreclosures to Go
• Find Law