I am really interested in buying a foreclosure but do not know which way to go. How do I get started?
Submitted by: BeautifulOne
I have been interested in foreclosures for the longest time but never decided to research further or take advantage of the market. Because it is a good time to buy I was hoping someone out there can offer some advice (in addition to the recent research I've been doing).
Because I don't know much about the process I will throw around a couple terms I've heard lately: REO, gov't tax lien certificate sales, title & bankruptcy search, property inspection, and HUD foreclosed.
I wanted to try a tax lien certificate but after doing research I'm seeing that this may not be the best way for me since I am so inexperienced. What is the best way for me to purchase a foreclosure and how do I get started? How long does the process generally take? Is there a way that I can see the property before bidding at an auction? If a property is a REO then I should be able to see the property before purchasing, right? Last question, When can I get the property inspected and a possible appraisal (before or after the property is bought)?
Whomever reads and answers this question, thank you in advance! I know this is a long question but I am serious about buying a foreclosure and doing the research necessary to attain this goal. Thank you.
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August 9th, 2008 at 7:23 am
Step one is to get approved for your loan. Without that, you don’t buy anything, and on some types you cannot even enter a bid.
Find a Realtor who knows how to sell VA, HUD and REO houses.
VA - The original owners had a VA loan and couldn’t make the payments. Now the Veteran’s Administration owns it.
HUD - Loan was FHA. Now Housing and Urban Development owns it. (these are my favorite for a variety of reasons - one is I believe the best deals are here for my buyers)
REO - “Real Estate Owned” (by a bank). Was a conventional loan - now a bank/lender owns the property.
All the HUD and Va and probably 99% of the REO properties are listed with a real estate company and put in the MLS. You need a Realtor to bid or offer on these.
Appraisals and inspections will be done after acceptance of your offer, but before closing on the house. On most, the house is sold “as-is”. This does NOT mean the house needs repairs, it means that IF there are repairs needed, the seller won’t do them. I once sold a brand new, never-lived-in HUD house. And the HUD house that my family and I live in only needed a bit of cleaning to the bathrooms and kitchen.
Get a Realtor who knows what he’s doing. I see many HUD bids get won, only to go back on the market because the buyer wasn’t prepared correctly or the Realtor missed some steps.
Good luck - and I agree with your evaluation of courthouse steps auctions - they are for the experienced.
August 10th, 2008 at 3:25 pm
It is prudent for one to make sure one has the finances already available be fore making a purchase.
This is what leads to foreclosures, buying a home, using finances from a third party, and then the third party calling the loan.That is why I say, it is important to make sure you have the finances available first.
If you do not have the money saved up already, then I would hold up buying until I did!