Buying Foreclosed Homes

Over the last five years over 75% of my business has been working with foreclosed homes. I have met some great buyers who have made some great money on these homes, but I have also met some buyers that have no clue what to do. In the next two weeks I hope to offer advice and hints on buying foreclosed homes and getting them to close quickly and easily.

1. Have a copy of your bank statement, proof of funds or line of credit (if you are paying cash) ready to go. If you you are applying for a mortgage, have a copy of the pre-approval letter or mortgage commitment ready. This will speed up the offer process. All banks I have worked with require some kind of proof of funds before they will even look at the offer. If you provide this to your Realtor before hand it will quicken the process.

2. Do not pay for online foreclosure site like Realtytrac. These are a waste of money. You are paying for the same list you can get from a Realtor for free and most of the time the list you are buying are badly outdated.

3. Use the sellers title company. Most banks contract out one company to do all their title insurance for that state. It will save you time and money if you use their title company. They will pay for their side of the title insurance and all searches and recordings. Remember banks have to clear title of all liens and back taxes before they sell.

4. Know what you are getting into. There is a lot of money to be made in foreclosures but you have to do it right. If this is your first one, get a home inspection or have someone bid the repairs to the property before you put an offer in. Check the house thoroughly. If there is no furnace or pipes you most likely are not going to be able to secure a loan on the property without a significant down payment.

5. Owner Occupants are king. The banks that own these properties want to have someone living in them. They will always give preference to owner occupants and even pay some of their closing costs. Not so much for investors.

6. Have your earnest money ready when making an offer. If possible have it in certified funds. This will convey to the bank you are a serious buyer.

7. Be open on your time lines. It usually takes 48-72hrs for banks to review the offers and get back. Be patient.