Question about buying foreclosures?
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Answer:
You can go to a bank and ask them for their foreclosure listings. A foreclosure is a piece of real estate, let's say a home, that the owner couldn't keep making payments on, or lost due to nonpayment of taxes, and whoever owned the mortgage took the house. (I'm being very general here) and now they're selling it.
You can get a great deal on a foreclosure, because everyday the bank has that house, they consider it a loss, so it's in your best interests to look into them.
My husband and I were looking at houses and our real estate agent asked if we wanted to look at a foreclosure. We saw it and we loved it. She told us the former owner was a contractor and he built it himself, but his business went bad and he couldn't afford to keep it. He tried to sell it, and painted the whole house (it was in perfect condition when we bought it) in anticipation of selling it, but it didn't work out and the bank took it.
Now we were lucky because a lot of people, when they know they're going to lose their house, will sabotage it. I've heard stories of people pouring concrete down all the pipes, so the new owner had to replace all the pipes, but these are things you must look at when you look at the house and if you're serious, have an inspector look too. You'll have to have it inspected anyway, before you close.
You don't have to put more money down on a foreclosure. We got a fixed 30 year mortgage and it was no different than if we were buying any other kind of house.
We did not have to pay cash. In fact, we did a piggyback mortgage, which is one mortgage for the deposit (we did a 3% downpayment) and one mortgage for the remainder. The smaller one was at a higher percentage rate but after six months we consolidated, cashed out a bit to pave the driveway, and got a great percentage rate.
It is a good way to buy a house as long as you are savvy about the condition of the house. Also, make sure you do a title seach (which is the law in NY and NJ) because if they los the house because they couldn't pay, they probably have unpaid debts that have been put against the house. When you do a title search, the title company looks for those debts and makes sure the bank shows proof that they were satisfied, or they must satisfy before you close, or you will be responsible-so that's another thing you must look out for.
Worth it? You bet.
In most states buying at a foreclosure sale requires ALL CASH. Not many people can do that. One big problem of buying at a foreclosure sale is you do not get to see inside the home.
Did you mean buying the property AFTER the foreclosure?
There is no difference on how you qualify because you still have to get a loan. In fact in most cases you need to be stronger.
The upside is you can by the house below market. The risk is that the property may end up needing more repair than you can handle.
If it's your first home forget it. To make it in foreclosures you have to know exactly what you're doing and you have alot of pros to compete with.
I would say it is a decent way if you are looking for investment properties. If you are a contractor or married to a contractor, not a bad idea. Go to MLS.com and they have foreclosures and pre-foreclosures all day in most cities.
The banking rules are a little different, you can usually get more money on a loan than the house cost for some repairs and whatnot.
It sounds like you are buying a foreclosure at auction. In those cases you need to be able to pay up front. It depends on the rules of the auction. Every county runs it differently. Basically, you need to figure out where you want to buy property, and then look at the rules for the auction.
Now, if you are talking about properties that have foreclosed, couldn't sell at auction, and are now owned by the lender - then you are talking about an REO (Real Estate Owned by the lender). These are sold by the lender through a realtor, and they are purchased just like a normal home. I recommend making low ball offers - last year there were record foreclosures throughout the country. Its your turn to squeeze the banks!
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