How to Buy a Foreclosed Home

Buying a foreclosed home can be an achievable way to buy a property at less than market value. It’s available to both potential homeowners and investors. 

However, the process is a little different than a regular real estate purchase. If it’s something that appeals, then it makes sense to understand what’s involved to ensure that your transaction/s goes through without a hitch.

Everything You Need to Know about How to Buy a Foreclosed Home

• Why are foreclosed homes so cheap?
• How do I find foreclosed homes for sale?
• What about financing?

Why are foreclosed homes so cheap?

A foreclosed home is where the owner has been unable to meet their mortgage payments over several months. While the lender has an obligation to assist them and make reasonable adjustments so they don’t lose their home, a line is drawn at some point and a foreclosure notice is given.

Because the owner has previously paid off some of the loan, the debt left is usually less than the current property value. The lender (or bank) will be keen to get rid of this debt, so often sells the property for somewhere near the amount left outstanding.

How do I find foreclosed homes for sale?

There are two main ways that you’ll find foreclosed homes for sale: at an auction or from the lender (generally via a real estate agent).

There are many legalities that a lender has to go through before they foreclose on a property. These differ from state to state. For this reason, the easiest way to find foreclosed houses is via an agent who specializes in them. Indeed, lenders don’t usually sell directly to individuals, meaning you’ll have to partner with an agent to do so. 

Look for an agent that deals with real-estate owned (REO) inventory, the term used for one who deals with foreclosed homes. They’ll be able to advise on properties as they become available. 

You can also do your own online investigation. Websites that list foreclosed properties include:

• HUD, the official government website.
• Fannie Mae HomePath
• Freddie Mac HomeSteps

Properties are most usually offered for sale at auction first. If they don’t sell, then they’re added to the REO inventory that you can access via a realtor. You’re highly advised to attend a few auctions before you go with the intent to buy. They’re often fast-paced and your bid is binding, so make sure you get into the swing before you go armed with your freshly-secured financing.

This leads us neatly to the next subject—how to finance buying a foreclosed home.

What about financing?

If you’re purchasing from an REO inventory via a realtor, you’ll probably get pre-approved for a mortgage. If looking to enter the world of property auctions, you may well need to go down the non-traditional lender route.

This way, you might secure a bridging loan, fix & flip loan, or another kind of BRRRR (buy, rehab, rent, refinance, & repeat) loan. Whichever way best suits your financing requirements, this should be explored at the earliest opportunity. This will ensure that you have the funds available at the right time and don’t miss out on the property you desire.

Now You Know How to Buy Foreclosed Homes, Speak to BRRRR Loans for Financing Options

BRRR Loans provide property financing across the USA for a wide variety of reasons. The purchase of a foreclosed home—either to live in or to increase your investment portfolio—is something we specialize in.

Whether you’ve already got your eye on a house and need to secure the funds fast or you’re simply dipping your toe in the water, we can provide all the financing info you need. 

Discover our range of financing products at https://www.brrrr.com.