Everything You Need to Know About Buying a Foreclosed Home
Foreclosures are an unfortunate reality of every real estate market. Though few cities hope to repeat the foreclosure nightmare of the Great Recession, there are still many homeowners who are bound to fall behind on their mortgages.
When this happens, an opportunity opens up for investors. Foreclosure sales are a chance to find properties at a discount even if you’re a novice at buying homes.
How to Buy a Foreclosed Home
The foreclosure buying process varies from state to state. But there are a few common practices with foreclosures that you can use to find deals.
First, familiarize yourself with your county courthouse where foreclosure sales happen. Larger counties have a more sophisticated record-keeping system which might mean you can find foreclosure sales online.
But in smaller areas, you’ll need to do some digging to learn about foreclosures in your county. Be prepared to pay a fee in some places if the foreclosure information requires a printout.
Foreclosure notices are almost always published in print. In some counties, this published notice of foreclosure comes in the form of a newspaper.
In other counties, the information gets distributed in a newsletter. The decision of where to publish is made by the county based on their available resources.
Expect that once the notice gets published you’ll have plenty of competition for the property. Real estate investors watch these notices to get access to local deals.
Where Can I Find Foreclosure Property Information?
Foreclosure sales come with a set amount of information to encourage buyers to attend the auction. The foreclosure auction is typically held at the county courthouse steps on a specific date every month.
When your county publishes foreclosure information, it includes the price and address of the property. This information allows buyers an opportunity to visit the property and do research.
Keep in mind, however, that it’s not legal to enter a foreclosure without permission from the owner. This is true whether the owner is a bank or a private owner.
You can drive by the property for an idea of its condition, but you could get in trouble for trespassing if you decide to enter the property looking to get a closer look.
There’s plenty of information online to help you gauge the condition of the property. Here are a few places to look when trying to get a sense of what the interior of the property looks like.
County Real Estate Assessor
Each county collects property taxes on residential homes. In order to determine how much a homeowner owes in taxes, the assessor visits the home to decide how much its worth.
The assessor uses things like square footage and property improvements to decide how much property taxes should be that year. If the homeowner recently did a major renovation that added on two bedrooms, this will be listed as public record.
These records are a great place to start when confirming the current owner’s information and the property details. You’ll find a floor plan for the home that includes where bedrooms are located.
You can see whether the home has an awkward floor plan or one that’s easy to remodel. One key thing to look for when looking at property records is the year the home was built.
The year the property was built tells you the age of the home. Homes from different time periods can come with their own sets of problems. For example, a home built before the 1950s might have asbestos issues.
You can plan for potential repairs if you know whether you’re buying new construction or a fifty-year-old house.
Real Estate Listings
Need photos of the inside of the foreclosure? Look no further than past real estate listings.
Most of these listings remain online at places like Zillow.com where you can review the photos in the sale document. These photos show an older, but typically accurate view of the home’s interior.
If you’ve noticed a lot of time has passed since the photos were taken, like ten years or longer, then you should assume the interior has aged noticeably.
Preparing for Auction
Not every newbie homebuyer is ready to compete at real estate auctions. These auctions attract the top investors in your area who have cash in hand and are ready to find good property deals.
Most of these investors are in a phase of their careers where they can look at a home and know exactly what it costs to renovate. If you’re not at this point yet, the idea of showing up with $150,000 in cash to a real estate auction and making a sure bet is intimidating.
But you can read more on sheriff sales to help prepare yourself for the process. If you’re shy, take the time to visit a few auctions before you’re actually ready to purchase
This gives you a sense of the local investing culture in your area. Avoid crowded auctions where there aren’t many property deals.
You’ll likely lose lots of time trying to compete for only a small amount of properties. Instead, opt to travel to nearby places in your region where more deals are available so you can get started investing.
Getting Ready for Foreclosure Sales
Foreclosure sales aren’t for the weak and the meek. They’re highly competitive events where seasoned investors and newbies battle for the best deals.
You’ll notice investors stop bidding once prices reach a certain point. Make sure you have this same level of self-control by setting a budget for the property you want and not bidding beyond that point.
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