How to Buy a Land Foreclosure
Buying a land foreclosure involves buying a plot of land--with or without structures on it--that has been foreclosed on. Buying a foreclosure can be different from purchasing standard property, since you may not have the same opportunity to examine the land or to take your time in making an offer. While buying foreclosed land can be a great investment opportunity, it is essential to educate yourself on the steps involved.
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Instructions
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Secure financing first. Often, when land foreclosures or property foreclosures are sold via auction, buyers with cash or guaranteed financing will be given preference. Even if buyers with cash aren't given priority opportunities, you may be required to make payment immediately or within days of winning an auction. Therefore, it is essential to secure your financing, loans or other cash for purchase before buying land.
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Research the land thoroughly. With a foreclosure auction, you may not have the opportunity to do a thorough inspection before buying. This is less important if you are purchasing land that doesn't contain a building, since it is less likely the land will have expensive problems. However, you still need to ensure that there are no liens or back taxes owed on the land, and that the land has the proper access to public sewer lines and other such amenities you may need. If you accidentally purchase land that back taxes are owed on, you may end up being responsible for those taxes in order to remove IRS liens from the land.
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Find out who owns the land. Foreclosed land is usually owned by a bank or other creditors and it may be difficult to find out exactly who owns the land. Contact lenders, or check the fine print and details on auction listings that offer foreclosed land. You need to know who you are buying from in order to make a proper offer.
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Fulfill the rules for bidding. A lot of foreclosed land is sold at auction and certain auctions have special stipulations. For example, HUD foreclosures are first offered to people intending to use the home or land as a primary residence. If the land is not sold at this time, it is then made available to investors. Furthermore, depending on the lender and type of foreclosure auction, you may need to submit your bid through an authorized agent.
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