Bank Foreclosures: How to Buy a Foreclosure Home

Tips For Buying A Foreclosed Home

With foreclosure of real estate properties climbing to historically high levels, many credit worthy Americans are taking advantage of the marketplace and purchasing properties in pre-foreclosure or at foreclosure auctions. It must be understood by the foreclosure investor that the property is purchased "as is" rather than with a contract loaded with safeguard contingencies.

Foreclosure must be a clean purchase and a clean bid. It is important to understand the difference between a pre-foreclosure and a foreclosure. In a pre-foreclosure transaction the borrower is in default. The investor can strike a deal with the homeowner and assume the mortgage or have the funds to take the lender out.

In foreclosure, the owner of the property is the lender. Notices of default are listed publicly so that parties interested in the property can begin considering the purchase. Today's foreclosures are affecting every income level and every price range.

A savvy investor builds a team who are prepared to act on a moment's notice. This is the first and most important tip for foreclosure investors. The ideal team should consist of:

• A foreclosure attorney
• An experienced real estate agent
• A general contractor
• A lender who is ready to act

Below are solid tips for buying a foreclosed property:

• Build a foreclosure team.
• Never purchase a property that has not been inspected by a real estate agent of the investor (only available in pre-foreclosure). Arrange to have a contractor inspect the property (this can only be done in pre-foreclosure).
• Perform a title search to make sure there are no surprises attached to the property. A title insurance company can help with this. This must be done prior to participating in an auction.
• Be prepared to pay cash or by certified funds at the auction.
• Know the marketplace. Many times foreclosure investors never see the property. That puts emphasis on a trusted real estate agent to make informed recommendations. The agent may be familiar with the property. If not, the agent should view the property in pre-foreclosure.
• Do not get emotionally attached to the subject property.
• Make sure there are no leases attached to the property.

If the property is not viewed by a trusted agent or the investor or the contractor, an experienced investor walks away. This is strictly a property investment strategy. The idea of purchasing a foreclosure is to buy low and eventually sell high. Always remember that real estate is all about supply and demand. If there is demand, prices are higher. If supply is high, prices are low.

When attending the auction, do not exceed your pre-determined price -- foreclosure investors are disciplined and organized.