According to research, there were approximately 56,174 properties in the United States filed for foreclosure in 2021.
Buying a foreclosed home can be a great way to get a good deal on a property, but it can also be tricky. If you’re not familiar with the process, it can be tough to know where to start or what to do.
But don’t worry. We’ve put this guide to help you understand everything that you need to know about how to buy a foreclosed home from a bank.
Check if the Borrower Has Filed for Bankruptcy
When more than three payments are missed, lenders attempt to contact borrowers before they foreclose. This is because some people simply chose not to pay on their loans.
If your target house has had several foreclosure filings in the past but no recent activity (because it was deeded back), then do not bother contacting the house anymore; it may actually be better off not buying that property.
Find Out if There Are Any Open Foreclosure Proceedings
You may find it difficult to determine whether the house is foreclosed or not. This is because many houses in foreclosure re-sells are still listed with real estate agents.
If your target property has an “under agreement” status, do not bother contacting the bank until this process is complete; otherwise, you might be wasting valuable time and energy.
Your realtor will be able to help you figure out where exactly you can find information about a property’s under agreement status.
Alert the Lender That You Intend to Purchase
Once you have confirmed that your target house is actually one that was foreclosed upon by its lenders, you should be able to contact it. However, do not offer a price yet since the bank may have its own asking price.
Whenever you are initiating contact with your target property’s lender, make sure that you indicate that you are only interested in buying the house for yourself and nobody else; otherwise, your offer might get scrapped.
Make an Offer on the Property
When making offers on foreclosed properties, be aware of how serious banks are about selling them fast. Because they want their cashback as soon as possible, most lenders will accept reasonable offers.
However, these offers must provide coverage of their required repairs and costs associated with relocation (if applicable). This is why it is crucial for potential buyers to thoroughly inspect homes before putting in any offers.
Have the Bank Sign Over Ownership of the Property
After you have negotiated a price with your target house’s lender, make sure that you close the deal within 30 days. Otherwise, your offer might not be valid anymore (and someone else might purchase it instead).
If all goes well and you are able to complete the transaction, the bank should sign over ownership of the property to you once they have received payment for its sale.
How to Buy a Foreclosed Home From a Bank
If you’re looking for a way to purchase your dream home, but can’t afford it in this competitive market, learning how to buy a foreclosed home from a bank may be just what you need. Foreclosed properties often sell at rock bottom prices.