When a homeowner can’t make his mortgage payment, then the lender could take the home back, a process called foreclosure. The house is then put on the market, sometimes at a cost substantially lower than market value. This makes foreclosed houses attractive to both consumers and investors looking for a bargain. Although there may be more competition and there are no warranties that the house is free of defects, the procedure for bidding on a foreclosure isn’t terribly different from that of purchasing any other home.
Find a lender and apply for a mortgage, unless you will be paying money for your home. Your creditor will advise you as to what documents you want to present to your underwriter. These typically include copies of tax returns, bank statements, pay stubs and also a list of your debts and the amount paid on them every month.
Hire a realtor. Most lenders will only entertain bids presented by accredited real estate agents. Consult your lender for a referral to someone she has worked with and urges.
Decide on a foreclosure home you want to buy and have your property agent compose the bidding. If the house is fresh to the sector and appears to be a fantastic bargain, bear in mind that you may be competing with investors, therefore make your best and highest offer and allow it to be subject to performing an inspection of the state of the house. If the house has been sitting on the market for a while, it’s either overpriced or there are significant defects. A lower offer would be appropriate under these conditions.
Prepare yourself to cover an earnest money deposit to follow your purchase agreement. The amount of the deposit varies by area, and your realtor can advise you on this. Some lenders just provide you a few days until you will be required to forfeit the deposit should you not obtain the house, so make sure you schedule all inspections immediately.
Hire a licensed contractor or home inspector. If the house has been on the market for more than a month, then have the review done before you place the offer. Most foreclosed houses are sold within an as-is condition, and the bank will not cover any repairs. It is a great idea to know the area of any work that should be done so you can cost your offer so.
Request that your broker submit your bid and wait word from your bank as to whether it’s accepted.
