As both real estate investors and realtors, a house in foreclosure is always part of our ongoing market evaluation. Sometimes, for a first time home buyer or investor, a foreclosed property can be a terrific opportunity to purchase.
Buying a House in Foreclosure isn’t Complicated
Buying a home in foreclosure is an option and it’s not complicated. There are a few things to keep in mind – not everyone will be able to purchase a foreclosure house. Especially if you are planning to buy with a conventional loan. The house has to meet certain guidelines and criteria. And, if you’re planning to buy with an FHA or VA loan…talk to a local realtor and a local mortgage broker. Some foreclosure homes will be acceptable if a certain loan product is used.
But again, it’s not complicated. Here’s an article on BankRate that explains it well and breaks it down into the 5 basic steps to make an offer/purchase.
When to Avoid It
The process of foreclosing on a house varies from state to state. But generally speaking, it is not a fast process. It is safe to assume that a foreclosed house was in the foreclosure process for at least 6-12 months. If it took a long time to get through the process; the house has deteriorated. Keep in mind, during the process the homeowners may have simply left the keys and walked away. But no one was maintaining the house. Not until the bank acquires the house as an asset might it received general maintenance through a property management company. In these cases – buying this type of home is usually not in a first time home buyer’s interest. Even with an FHA 203k loan, the work may be too excessive.
A Pre-foreclosure “Listing” is not an MLS Listing
As a realtor, I get the question all the time “can I buy a home that is in pre-foreclosure” (basically, as a retail buyer, you can’t – here’s another blog if you’re curious). Here’s the issue, these are not homes for sale. Homeowners are working to remedy the situation with their mortgage company. Before reacting to a “Listing” you saw on a particular real estate app, check for the words “pre-foreclosure”. If you see these words – move on. It’s not for sale. If you see just the word “foreclosure”, check with your local realtor. They will be able to verify if it is in a sellable status.
Questions? Give me a shout.