How to Pay Cash for Foreclosures

Buying a foreclosure with cash has its advantages.

A total of 2.8 million U.S. households received foreclosure filings in 2009, an all-time record, according to online data firm RealtyTrac.com. This does present an opportunity to buyers, however: Foreclosed homes often come at below-market-rate prices as banks try to unload them quickly. Those buying foreclosed homes with cash--who don't have to go through the mortgage application process--can purchase these residences quickly, and then either live in them or renovate them and sell them for higher prices.

Things You'll Need

• Computer with Internet connection
• A real estate agent
• Phone numbers and website addresses of local banks and lenders

Instructions

1. Call a local real estate agent and ask the agent to find area foreclosed homes for you. You can also perform an online search for "foreclosed homes" to find several listings in your community. You can work on your own, too, but it's usually easier to find foreclosures if you are working with an agent.

2. Log onto the housing page of the U.S. Department of Housing and Urban Development (HUD). This page will give you the option to search for foreclosed homes offered by HUD in your area. You will only be able to make an offer on these homes if you are working with an agent who is approved to work with HUD homes.

3. Prepare an offer, with your agent's help, on any foreclosed property that interests you. Make sure that your agent tells the listing agent or bank that owns the home that you are a cash buyer. Sellers, including banks, prefer working with buyers who pay for their properties with cash. This will help if several potential buyers are competing for the property that interests you.

4. Agree to a price for a foreclosed property. You may have to submit several counteroffers to reach agreement with the seller of the home. Once you do agree on a sales price, you can then pay for your new home and sign the closing documents that transfer ownership of the residence to you.

Tips & Warnings

• Most foreclosed houses come in "as is" condition, meaning that you'll be responsible for fixing everything that is wrong with the property. Be careful, then, when making your offer to leave some cash for the inevitable repairs you'll have to make.

References

• Bankrate: Tips For Buying A Home In Foreclosure
• Kiplinger: How To Buy A Foreclosure