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Tips for Buying Foreclosure Houses Through Public Auctions and Mortgage Lenders  

Article by Simon Volkov

Buying foreclosure houses can be a smart choice that saves buyers time and money, if they understand the process. Many people believe the only way to buy repossessed homes is through public foreclosure auctions. While this method can yield savings, buyers must first determine if the property has attached tax liens or creditor judgments.

Foreclosure houses sold through auction often have two or more mortgages. The purchase price is determined by the balance owed on the first loan and does not include the cost of paying off the second or third mortgage note.

In some cases, evicted homeowners refuse to vacate the premises. When this occurs, buyers are responsible for the cost of eviction. Additionally, in some states foreclosed homeowners have the option the buy back their home after it has been purchased through auction.

A better option for buying foreclosure houses is to purchase bank owned real estate. These properties encompass foreclosure property that did not sell through auction. Once real estate is returned to lenders, the banks engage in creditor negotiation to remove attached liens and pay off existing mortgage notes. Although bank owned properties have a higher price tag, they are sold with a clean title; allowing buyers to quickly take possession.

Many buyers are turning to Fannie Mae’s Home Path Mortgage program to buy bank owned foreclosure homes. Home Path offers buyers special financing options and a low down payment requirement of 3-percent.

Home Path Mortgage can also be a good choice for real estate investors. Many of the homes for sale through Fannie Mae make for excellent rental properties or can be used to offer seller carry back financing or lease options.

Real estate investors are allowed to purchase up to five bank owned homes through Home Path Mortgage. Many of the foreclosure properties are eligible for HUDs Neighborhood Stabilization Program (NSP) which offers grant money to buyers who purchase bank owned homes in areas with a high rate of foreclosure. Using NSP grants in combination with Home Path’s low down payment requirement allows investors to capitalize on savings while helping to revitalize neighborhoods.

Foreclosure houses generally require some level of repair. Properties are sold in ‘as-is’ condition and are not under warranty. Buyers must conduct due diligence by obtaining property inspections and appraisals.

Buyers unfamiliar with purchasing foreclosure houses either through public auctions or banks may find it beneficial to work with a real estate agent who specializes in foreclosure sales. These professionals can offer advice about neighborhoods and help buyers quickly locate foreclosure houses for sale.

Foreclosure specialists can scour the Multiple Listing Service (MLS) database to locate nationwide foreclosure properties. MLS consists of a variety of properties for sale including foreclosure, bank owned, and short sale real estate.

There is an abundance of foreclosed and bank owned homes on the market. Foreclosure houses can provide substantial savings as long as buyers take time to become educated about the process of buying distressed properties. Those who do their homework can potentially save thousands of dollars and locate an affordable residential home or profitable investment property.

About the Author

Real estate investor, Simon Volkov, shares insider-secrets and offers helpful information and resources about how to buy foreclosures houses via his website at www.SimonVolkov.com.

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