Q: What is a foreclosure and how do I go about buying them?
A: A foreclosure happens as a result of a homeowner’s default on their mortgage payments. When a homeowner can no longer make payments towards their mortgage, the lender will still need to collect the remaining debt. In order to do this, the lender will file for foreclosure, which gives them the right to sell the home in order to regain the amount owed on the mortgage debt.
Most foreclosures are sold by public auction, although some may be sold privately by banks as a result of repossession. Many others are sold by the owners in the pre-foreclosure stage in order to avoid a full blown foreclosure and public sale. All foreclosures offer a chance for homebuyers and investors to purchase property for discounted prices.
The basic process of buying a foreclosure through ForeclosureListings.com starts by searching our database of foreclosure listings for homes available in your area. Our listings are extremely detailed, and provide all kinds of information about each property. This includes the type of foreclosure it is, statistics on the home, and who to contact to learn more about the home.
ForeclosureListings.com can help you learn about all different kinds of foreclosures and the different procedures for buying them. Reading our FAQ is a good way to introduce yourself to different types of foreclosures. We also offer information on calculating offers and getting the best deals possible. We have information on the Foreclosure Laws and procedures for different states, which can be found here.
We can also help by putting you in contact with local real estate agents who can help you pursue purchase, or we can teach you all you need to know so you can attend auctions, contact pre-foreclosure homeowners, or buy direct from banks. Once you know the basics, you’ll find that the more properties you view through our listings, the better you’ll be at determining which are the best values.
To learn more about buying pre-foreclosures, click here.
To learn more about buying foreclosures at auction, click here.
To learn more about buying REO homes, click here.
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Q: How do I purchase a Pre-Foreclosure before it becomes a foreclosure?
A: When someone refers to a property that is in the “Pre-Foreclosure” stage, they mean that the owner of the property is in default on their mortgage payments. The owner has not yet been foreclosed upon, but if they do not settle their mortgage debt within a given amount of time, a foreclosure will be inevitable. Many homeowners who see no real way out of debt in the immediate future will attempt to sell their home in the pre-foreclosure stage, because it allows them to both avoid a sizeable foreclosure debt and receive something in return on the home.
Each pre-foreclosure listing you find on ForeclosureListings.com will list the contact information for the property owner. The first step in buying a pre-foreclosure is to get in touch with the owner and arrange to meet to discuss a sale. Don’t be too pushy, but show firm interest in the property so that the owner remembers you and takes your interest seriously.
Before you make an offer on the property, make sure you calculate it properly. A good way to do this is to take the estimated market retail value of the property as a starting point, and subtract from that any additional costs you as an owner will incur. This includes the remaining loan balance inherited from the previous owner, any additional liens on the property, any repair costs, and anything else that is necessary to have the house free of debt and in good condition. There are tools on the ForeclosureListings.com site to help you with these calculations.
Remember, a pre-foreclosure home is not yet in the foreclosure stage, so if the owner doesn’t respond right away, don’t be discouraged. They may be pursuing other options. Also, many homes can still be purchased anytime before the date of an actual foreclosure sale. But a buyer willing to pay in cash who makes an offer at the right time can often be the best option for a homeowner in default.
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Q: How do I buy a Foreclosure property at auction?
A: When a homeowner defaults on a mortgage payment and does not make up the payment within a specific amount of time, the lender will be forced to foreclose on the property and sell it at auction in order to regain the amount left in debt on the loan. However, since the lender only needs to collect the remaining debt, and not the full loan amount, a foreclosure property can often be sold for below its actual value at auction, and the lender will still be satisfied. Attending auctions and buying foreclosure property is an excellent way to purchase property for a discount.
When you view a listing for a foreclosure scheduled for auction on ForeclosureListings.com, the listings will contain a contact number for the “trustee” of the sale. The trustee is in charge of the auction, and we recommend contacting that person to confirm dates and review the conditions of the sale.
One of the first steps in deciding whether or not to buy a property at auction is to first perform a title search to see if there are any other liens or fees associated with the property, as well as to see its history. A lien is an additional claim besides the mortgage by someone whom the homeowner owes money, and could be in the form of a home equity loan or any other additional loan taken out against the home. Be careful when reviewing this information, because extra lien fees could negate the savings you stand to gain by purchasing at auction.ForeclosureListings.com can help you perform a title search to find out, just click the link provided with the listing. Some sales may waive all other liens, so it is important to check with the trustee as well.
Before attending the auction, make some calculations as to what your highest bid on the property will be. Start with the market value of the homer, and factor in repair costs, lien payments, legal fees, or any other costs associated with buying the home or improving its condition. You should treat this figure as your ceiling or maximum bid. Any amount less that you pay than your maximum bid is total profit, and represents the amount you have saved on purchase and stand to make on resale, if you sell at your estimated market value. You should never pay more than your ceiling price for a home at auction. And remember to arrange to make your payment in cash, since some sales require this, Plans for payment can be worked out with the trustee before or after the sale, but make sure you can pay in the correct fashion before you bid.
One of the best ways to become experienced at auction purchase is to attend some auctions and just watch. This way you’ll get an idea of how it works. And remember, the less you pay than your maximum bid, the more money you save or stand to make on resale. Don’t feel like you have to purchase the home at the first auction you attend. If the bidding exceeds the value you’d like to pay, let it go. Buying at auction is all about getting the best deal possible, and there are plenty of other homes out there.
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Q: How do I go about buying an REO property from a bank?
A: An REO property is a property that has been taken control of by a lending bank either through repossession prior to an auction or after a foreclosure has runs its course. The bank will look to sell the home in order to regain the amount owed on the previous homeowner’s loan.
The advantage to buying an REO property is that the bank will often wave all liens or debts associated with the property upon sale. However, the amount you stand to save off the actual market price of the property is less than you would by purchasing at auction or through a pre-foreclosure agreement.
When you view a listing for an REO property on ForeclosureListings.com, you’ll be able to see the lender’s contact information. You can then get in touch with them to arrange to see the property. As usual, before you make an offer you should do a title search, despite the fact that the bank usually waives all liens. ForeclosureListings.com can help you with this, as it is an excellent way to examine the history and condition of the property. Also, you should ask questions, such as whether or not the bank has performed repairs on the home or whether it is sold “as-is”. Once you calculate the market value of the home, minus the cost of any additional repairs or fees associated with purchase, you will have your maximum offer. Offer something lower at first, to try to maximize your profit. Banks often tend to want to sell REO homes as quickly as possible, so you can often buy for below market values.
However, you must be aware that many bank-owned REO homes are subject to periods of “redemption”, during which the original homeowner may buy back the home if they come up with the necessary money. So just because a home is listed as an REO, it may not be for sale until after the redemption period has ended. Check with the lender or local state laws to see how long the period of redemption will last.
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Q: I’m having trouble contacting the bank owner of the REO property I am interested in. What should I do?
A: It’s important to remember that the first job of banks is to lend money and provide financial services to clients, not to sell real estate. For this reason, it may be hard to get in touch with the right department at banks that own REO properties, especially when you can’t be there in person.
ForeclosureListings.com always provides the name of the lender in its REO listings, and we try to provide their phone numbers as well. But if you can’t find a number or are just having trouble getting through to the right department, there are other options.
First of all, you can check if the bank has listed the property for sale with a real estate agent. ForeclosureListings.com can help put you in touch with an agent in the area of the home to find out if this is the case. You can then work out the offer you’d like to propose, and deal through the agent.
You can also try contacting the local Property Assessor for the city or county. If you provide them with the address and home information, they can usually tell you who currently owns the home or is in charge of it. They can also provide contact information.
ForeclosureListings.com can even put you in touch with a real estate agent local to the area of your REO who can inquire into the property for you. No matter what, don’t get discouraged. Contacting a lender can be difficult, but it is very possible to get through. Send letters, make phone calls, and someone will notice you. Remember, banks want to sell REO homes just as much as you want to buy them.
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Q: How do I go about buying property on ForeclosureListings.com?
A: Depending on the types of homes you decide to pursue, there are different methods for buying homes listed on ForeclosureListings.com. Each listing tells what kind of property is described, whether it’s a home going to sale at foreclosure auction, a home available for purchase from a bank, or a pre-foreclosure that can be purchased direct from the homeowner. Each listing has contact information on who to contact to learn more about the home and how it will be sold. Foreclosures and repossessed homes have different procedures for purchase depending on the laws of the state or area. You can read about laws for buying foreclosures in different states by clicking here. We also have FAQ’s on buying different types of foreclosures like auction homes, pre-foreclosures, and REO properties.
If you’re attempting to buy a For Sale By Owner (FSBO) home, please consult our FSBO FAQ by clicking here.
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Q: How do I check for outstanding liens on a property, home equity values, or if the owner has filed for bankruptcy?
A: If an owner has filed for bankruptcy and you want to purchase their foreclosure property, it often means you’ll have to pay their remaining loan debt. Similarly, learning how much equity is paid off on the home will help you determine how much the lender is going to want at auction or through a sale, since they will want to retrieve the remaining debt on the full loan amount. Therefore, it’s of the utmost importance to learn about liens, bankruptcy, and how much equity is built up in the home so you can calculate these values into your maximum bid and determine whether buying the home will be worth it.
One of the most effective and accurate ways to view liens concerning properties is to perform a title search, which ForeclosureListings.com can help you with. Click here to go to our title search page. This will show you all liens associated with the property.
If a listing has a bankruptcy associated with it, the ForeclosureListings.com listing will note that. You can contact the current owner of the property or the trustee of the sale as listed to find out more about the bankruptcy, or about the home’s equity. You can also contact the local Property Assessor to find determine who owns the property or is in charge of the sale.
Learning about the liens, associated debts, and home equity on a property is important because it influences the true cost and value of the property. When determining the home’s value, start with the estimated market value of the home. Then subtract from that any additional liens associated with the property, as well as estimated repair costs, legal fees, etc. You can call this your maximum offer on the property, or the amount at which if you were to pay any more, you would no longer be profiting or breaking even on the purchase.
Then, subtract the equity built up in the home from the estimated market value. This is what you can expect the lender will want for the property. Depending on the type of sale, this figure may or may not be subject to change. For REO homes, it is usually not, depending on the condition of the property. But for auction sales and pre-foreclosures, the sale price can be very flexible. Compare your maximum bid with what you can expect to pay for the home, and determine if it is worth it.
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Q: How will ForeclosureListings.com help me to pursue properties once I’m a member? Will I have to do it all myself?
A: In the end, you’ll have to decide on which properties you want to buy for yourself, but we will do everything we can to help you find the right properties for you and prepare you for that decision.
For starters, we offer some of the most detailed property listings available anywhere. When you search for properties in a certain area, you’ll have access to all kinds of information about the property that you’d never get from a traditional newspaper listing, including great photographs. We also provide contact information so you can contact those in charge of the homes or sales that interest you, so you can inquire about further details or make offers.
Another great feature that helps you locate properties and stay on top of the newest listings is our Property Alert service. Once you specify the areas that most interest you, or that you’d like to pursue homes in, we will automatically e-mail you listings for those areas as soon as they are made available, even before we post them in our general database. This will give you the edge you need to buy these homes, since time is an important factor in getting the best deals.
We can also help put you in touch with real estate agents in the areas that interest you to further expand your search and help iron out details of more complicated sales.
But our most helpful feature is by far our Customer Support Service. We are on hand 24 hours a day, 7 days a week to answer any questions you have regarding foreclosure listings, the process of purchase, or anything else concerning your search for great real estate. We are a dedicated team of real estate professionals with 20 years in the business, so don’t hesitate to take advantage of our knowledge!
With ForeclosureListings.com, you get access to more than 500,000 properties from all over the United States. We are constantly updating our listings and adding new features and services to make your experience with our site easier and more effective. We are the best source for foreclosures, anywhere on the internet.
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Q: What do the “Price” amounts in dollars mean that are displayed on each listing?
A: The price shown on each listing is generally the amount remaining in mortgage debt that the lender needs to collect from a sale in order to break even. We provide this amount because it is a good place to start in estimating how much you will offer for the property, but don’t assume it’s the price you are going to pay. In some cases you can expect to pay more or less than this value, depending on the type of foreclosure or sale that the price is associated with. The price we offer is an estimate based on factors such as equity in the property and additional liens on the property, and can also be used as an opening bid, since it often represents the lowest possible price that the owner can sell for while still breaking even.
In some cases, we may not be able to find enough information to provide this calculation, and we will list the price paid for the property by the previous homeowner when they first bought the property. If this is the case, we will indicate it on the listing. In rare cases, we may not be able to provide any price, but by contacting those in charge of the home as listed, you can learn the details of the sale.
The price listed can also help you in determining how much to offer on the property. ForeclosureListings.com offers several calculators that can help you estimate a base offer by subtracting the liens associated with the property from its market value, as well as lots of information on maximizing your profit through bidding at auction or making offers to lenders and homeowners.
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Q: How can I determine a home’s market value?
A: The best way to determine a home’s market value is to have it appraised by a professional. If you are in the area and can make arrangements with the trustee of the home or its current owner, you can hire an appraiser and visit the home to have it independently appraised.
For most foreclosure sales, especially auctions, the trustee, lender, or person in charge of the sale must arrange to have the property appraised before the sale take places. So often times you can find out the results of this appraisal by getting in touch with the contact provided on the ForeclosureListings.com listing that interests you. However, it’s still good to get an idea of the property’s value for yourself, so arranging an independent appraisal can be in your best interest.
You can also make estimates based on the original sale price of the home before its owner defaulted, and by comparing that with current property values in the area. This will give you a good ball park figure to work with. Be sure to think about repair and improvement costs however, as they will have an impact on the amount you end up putting into the property.
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