Another option for homebuyers is foreclosed properties. These homes are sold by lending institutions (i.e., banks, Freddie Mac) or government agencies (i.e., Department of Housing and Urban Development or Veterans Administration) when the previous owner defaulted on the loan. Many of these properties need significant repair work. Buyers who are willing to invest the time and money in repairs may find a good deal with a foreclosed property.
Anyone can buy a foreclosed property. You must have the cash or be able to qualify for a loan though. (NOTE: HUD foreclosures prevent the use of a FHA loan.)
Potential homebuyers should contact their REALTOR® to find out about foreclosed properties in the area. Properties can be listed in the Multiple Listing Service, in the newspaper real estate section and online.
The process of purchasing a foreclosed home varies from how traditional homes are sold. Your REALTOR® will be able to help you navigate through the process of purchasing a foreclosed property.
It is important to remember when you purchase a foreclosed property, you are purchasing it “as is.” You won’t be able to negotiate that certain repairs be made. It is important that you carefully inspect the home before you make a bid. The property may appear to be a good deal, but the cost of all the repairs may be more than you can afford. You should hire a home inspector to check out the property before you make a bid. If you’re serious about the home and it needs repairs, get a bid from a contractor first.