1. Financing – In order to make an offer on a foreclosed home, you need to be prepared to buy it. There are many financing options available, including FHA (3.5% down payment), FHA for HUD homes ($100 down), HomePath for Fannie Mae properties (3%) and USDA Rural Development (0 down but only available in certain areas. There are renovation loans available if the home you find needs improvements.
2. Find a home – You are ready to start your home search based on the pre-approval you’ve obtained from step 1. There are many sites available for searching for homes but you will find that the local MLS search will usually provide the most up to date information. If you’d like to get on a list to receive automatic updates of foreclosures as they come on the market, let me know.
3. Arrange to view homes – Make sure you are working with an agent who can show you all the homes listed for sale in your area. Only HUD registered agents are authorized to show and submit offers for HUD owned properties. Your agent should be a member of the local MLS to be able to offer you information on all homes for sale.
4. Make an offer to purchase – There are different requirements for each type of foreclosure. Bids are accepted from owner occupants only for the first 15 days on Fannie Mae properties and for the first 30 days on HUD homes. This allows buyers who will live in the homes the first opportunity to purchase these homes. It is important to know the restrictions if you are buying a home as an investor or if you have a co-signer on your loan. The contract must be written correctly to satisfy requirements of the seller and of your lender.
5. Inspection – Utilities are on at many foreclosed properties. In order to get a complete inspection, it is important that the listing agent has utilities activated (property may be winterized) to allow for the limited inspection period allowed by the seller. In the case of HUD owned properties, the buyer must pay a fee and request permission to activate utilities for the inspection.
These 5 steps to buying foreclosures give you the basics. There are additional details to be considered along the way, so working with an agent who has foreclosure experience can help the process move along smoothly. If you have questions about buying a foreclosure or if you’d like to get a (free, no obligation) list of all current foreclosures in the area, call me at 706-296-4395 or send a message.