How to Bid on Foreclosures
Buying a foreclosed property can be a good investment for people who invest in real estate as well as a way to get a home for a reduced price. A foreclosure occurs when a bank or other financial institution repossesses or sells property when the owner defaults (fails to make payments) on the mortgage (usually three months in arrears). Once the mortgage is in default, the lender can start foreclosure proceedings. Many times, a buyer can get a foreclosed property for less than the market value since the lender doesn't want to sit on the property.
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Instructions
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The first step is finding a property in foreclosure. Check the local newspaper in the area where you want to buy the house as a list of foreclosed properties must be published in the local paper. Foreclosure listings can also be found on government websites such as the IRS and the Marshall's Service as they sell property seized due to failure of the owners to pay taxes or that was seized from a criminal. (See Resources.) You could also look online. (See Reference 3.)
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Get financing for your purchase. If you get the financing worked out ahead of time, you'll know how much you can afford to spend, and you can move faster when you find a property that you want to buy.
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Contact a real estate agent. In addition to assisting you with the normal home-buying process, an agent can also help you with any issues that might arise with a foreclosed property.
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Contact the owner to see if you can make an offer. If the owner won't be able to stop the foreclosure, he or she might be willing to sell at a cheaper price to prevent hurting their credit rating. Keep in mind the real estate laws of the state that the property is in as the owner will be given a length of time to try to pay off all liens, taxes and other claims that are forcing him to sell. The laws vary from state to state, so your real estate agent, or a real estate lawyer, can be invaluable in this step of the process.
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Make your bid. It might be directly to the owner, or it could be at auction, but this is when you'll make an offer on the property.
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