Buying a foreclosed home can be very profitable but you need to understand what is involved. A foreclosed home is when the homeowner can no longer make payments on his or hers monthly mortgage. After a certain amount of time the lender will take ownership of the house and force the occupants out of their home. Below I have outlined how you can locate foreclosed homes and how you can go about buying one.
Foreclosed homes can be located by looking through public records in the area you are interested in buying a foreclosed house. It’s required by law that lenders file foreclosure paper work with the local town or city.
Once you located a foreclosed home you need to find out if there are any liens or other claims on the property. You also need to find out if any back taxes are owned and who is responsible for paying them. This can greatly increase the price of a foreclosed home.
Check the market value of similar homes in the area to find out how much you can sell the foreclosed home for. You also need to include the cost any repairs that may need to be done on the foreclosed house.
If the title is clean and the homeowner is still able to sell the home, you can make an offer with the owner. Many homeowners in a position of loosing their home, through foreclosure, will be willing to accept a low offer out of fear of loosing everything.
If the bank has ownership of the house but has not place the property on the market, you can make them a low offer and slowly raise the price. Before doing this make sure you have done your homework. You need to know the market value of the house, how much the loan is in default, taxes, etc.
If you can not negotiate with the bank, then you will need to try and purchase the foreclosed house through an auction. Know what your biding limits are in the auction and never over bid. Always have all the details on the foreclosed houses before bidding. You don’t want any surprises if you win an auction and become responsible for additional payments.