is Last Updated on April 2024

Finding and Buying Foreclosure Homes

A home is still considered by many as the ultimate American dream. But this dream could quickly turn into a nightmare when first-time homeowners shop for their dream-house. Oftentimes frustration sets in upon discovering that the home they are eyeing is not quite fit for their budget. While some of them accepted their fate, others have thought of ways to still get that dream-home. They turn to the foreclosed homes market. Homes that are under foreclosure could be had at a bargain usually you get 20% to 30% off the original price. And with a lot of properties now under foreclosure it might be a good time to dive in and make some profit. In 2008, in California alone, almost 40% of new home sales came from foreclosure; that is a far cry from the 5.7% a year ago. But before jumping into this market it is better to understand how it works to avoid pitfalls along the way.

Home foreclosure starts with pre-foreclosure. This is when the owner of the home defaults on his monthly payments. But still it is with the possession of the owner and yet to be auctioned off. Potential buyers could go through the listing of payment delinquency notice which are posted in courthouses. With this knowledge in hand buyers should go out and scout prospective sellers. But be aware, usually negotiations with sellers under this situation could become stressful. As a buyer you are trying to bring the amount you will shell out to the minimum. In the sellers prospective they want to get the maximum amount that they could squeeze. This is where the friction starts. Sellers usually tends to become emotional and angry. They fell that you are taking away a possession that is very dear to them. Explain to them that you are not taking advantage but merely helping them out of their predicament.

If the homeowner is still in default of his payment, the property will be auctioned off by the courthouses. First-time home buyers are advised to get expert help when acquiring properties this way. In this case, buyers are not allowed to inspect a home. There is also no way to know what kind of liens or back taxes these homes have on them. Factoring all of these might cost you more in the long run. Also you need to have ready cash if you enter into this kind of deal. They require 10%-20% payment on the spot and completion of payment should be made in a few days.

If the lender is able to get the property back then this is the post-foreclosure stage. At this point this is treated as a normal sale but also with a bargain. Usually you could look up at property management website to search for "real estate owned" or REO properties. You could also get a real estate agent to help you look for properties. Usually homes on REO offers less bargains but the good thing here is the property is properly screened. All the paperworks are in order and you will not worry about hidden fees.

You can search and find foreclosure home listings online. Check out our foreclosure websites review page for all the top and legit foreclosure home listing websites online.