There are still a wide variety of foreclosed homes on the market if you are looking to score a nice deal on a home. Buying a foreclosed home though is a little different than purchasing a home that an individual is selling themselves. A foreclosed home is sold through the bank that now owns the home.
#1 Generally Work with One Real Estate Agent
When you purchase a foreclosed home, there is generally one real estate agent who is in charge of the listing for that home. You may need to have your real estate agent set up a showing with the particular real estate agent that the bank has chosen to work with.
#2 Need a Pre-Approval Letter
If the selling price on the home is large enough for a mortgage, you are going to need to show the preapproval letter that meets or exceeds the selling price of the home from your lender. The seller (in this case the bank) is going to want to make sure that you already have the approval to purchase the home before going accepting your offer. The bank only wants to work with buyers who will be able to finalize an offer.
#3 Cash Payment May Be Necessary
With foreclosed homes, you don't always need to be prequalified for a mortgage. Often, banks will sell foreclosed homes based on the amount of money that is owed on the home instead of the market value of the home. Foreclosed homes are often sold for the amount of back property taxes or the amount remaining on the mortgage.
That means that sometimes, you can purchase a foreclosed home with cash. If you are planning on purchasing a foreclosed home with cash, the seller, instead of a statement of preapproval from your lender, is going to want to see a bank statement that supports the fact that you have the cash necessary to purchase the home. Be ready to show liquid assets if you want to purchase a foreclosed home with cash.
#4 Foreclosed Homes Are Sold As-Is
With foreclosed homes, they are generally sold as-is, which means if the water heater is missing, the roof needs repairs, or the electrical wiring needs to be updated, that is all on you. Some foreclosed homes are in pristine condition, and others have been stripped or damaged by the previous owners or scavengers.
Make sure that you still get a home inspection when looking at a foreclosed home, and make sure that you can afford the necessary repairs to make the home livable before you purchase the home.
If you are interested in looking at foreclosed homes to buy, be prepared to show that you have the assets or financing power to purchase the home, and be prepared to accept the home as it is. With foreclosed home, getting a great deal means that you have to fix up issues with the home and you have to be able to prove up front that you can afford to purchase the home.