How to Buy a Foreclosed Home

Las Vegas, Los Angeles, Phoenix, Orlando and more popular living destinations now have foreclosed homes that are a potential bargain home buying opportunity for you. 

Recent downturns in the national real estate market translate into more affordable homes that are on the market.  With a little careful research and planning you can turn a foreclosed home into your new dream house.

Fannie Mae Opportunities

Fannie Mae operates in the United States secondary home mortgage market. Rather than making home loans directly to consumers, they work with mortgage bankers, brokers and other primary mortgage partners to help ensure they have funds to lend to potential home buyers at affordable rates. They fund mortgage investments primarily by issuing debt securities in the domestic and international markets. 

There are many Fannie Mae backed home loans on foreclosed properties so be sure to ask your local bank about foreclosed Fannie Mae homes in your area.  Fannie Mae executives have stated recently that they are pushing hard to sell foreclosed homes at bargain prices.

Timing

Many real estate experts believe that now is the time to purchase or invest in foreclosed homes.  Real estate investments can be a lucrative addition to your retirement portfolio.  Compared to just 5 years ago the prices of foreclosed homes are at all time lows.  Market analysts are predicting that we are close to or at the bottom of the current real estate downturn. 

Home Owner Falls Behind on Payments

Typically, a home enters the pre-foreclosure phase when the home owner falls behind on his or hers monthly mortgage payments.  The bank does not own the home yet.  Most lending institutions file a delinquency notice at the local county courthouse when a home owner misses a monthly payment. 

At this point in the foreclosure search process it is very advantageous to contact the home owner directly and inquire as to the potential of a direct discounted sale of the home.  Don’t be afraid to knock on the door and inquire in person.  Many deals have been realized by buyers using this technique.  You can realize discounts ranging from 20-40% buy working directly with home owners that cannot make their payments. 

Some lenders will agree to a short sale in which the sale price is less than what the owner owes on the home and the lender agrees to forgive that portion of the debt versus getting the home back under bank ownership.

County Courthouse Sales

Sometimes you can literally purchase a foreclosed home off the courthouse steps at an auction.  These sales are not without risk.  Many buyers are required to purchase the home “sight unseen”.  This means that you really do not know the extent of repairs that may be needed to make the home acceptable for habitation. 

Another risk is that many of these auction homes have liens filed against them due to unpaid taxes so this can increase your purchase price.  Last, you may be required to have cash for a down payment in the range of 10-30%. 

Bank Owned Foreclosed Homes

You will typically find these foreclosed homes on the Real Estate Owned or REO market.  Banks will list these properties with a brokerage or real estate agent.  Do your research on the web to find local bank owned homes in your community of interest.  You can also search on EBay, Fannie Mae and Freddie Mac to locate these homes. 

This is probably the safest option for you as a home buyer to acquire a foreclosed home.  Listing prices for bank owned foreclosed homes are often lower than other homes.  Sometimes, depending o the real estate activity and market in your community, you can realize a significant discount by purchasing a REO home.

WhatIsHUD.com is an information website owned by What Is It LLC.

Learn more about What Is It at MyWhatIsIt.com... "We Simplify The Complex".

The official U.S. Government HUD Web site is HUD.gov