If you are looking at the possibility of buying a foreclosed home, you must first take into consideration a few things. While foreclosed homes are often bargains, they come with some costs too. When people speak of buying a foreclosure they may be referring to buying during two different stages of the foreclosure process. You may buy a foreclosed home at an auction; this is the forced sale by the court that is set after a judgment has been made. If the home doesn't sell at auction, it reverts to the bank that holds the mortgage. You may also purchase these properties, called bank-owned or REO properties. Whether you buy at auction or buy an REO property, there are pros and cons to each purchase.
When you want to buy a property at an auction, you do not need a real estate agent. Although it varies based on the state that you live in, most real estate auctions are held through the clerk of courts in the county where the property is located. This is the case in places like Florida where they practice "judicial foreclosure." This means that the bank must file a lawsuit against the homeowners, and the court must give a judgment before the bank can take possession of the title or property. Often times, these auctions are held online.
When buying an REO property, you need a real estate agent. Look for a broker that specializes in REO homes. Most lenders work with one or two brokers to list all of their REO properties and maintain a close relationship. You also need to find a lender and get pre-approved before buying an REO home. These properties are usually great deals, so they go quickly and you may not have time to secure funding after you make an offer.
If you are considering purchasing a foreclosed home, contact us with questions or to help with your lending needs.
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