How to Buy a Foreclosed Home

Interested in purchasing a foreclosed home? Homes in foreclosure can be a great deal for renovators, since you can often get a great deal on a property that you were intending to flip anyway. But the process of how to buy a foreclosed home isn’t quite the same as the process of purchasing a traditional house. It’s important that you understand the right way to go about it early on so that you don’t waste a significant amount of time or money heading in the wrong direction.

Buying a Foreclosed Home vs. Buying a Standard Home

Long before you get to showings and offer letters there are a number of key differences that you’ll need to understand about buying a home in foreclosure versus buying a standard home for sale. We’ve covered these in more depth before, but here’s a quick breakdown:

You won’t be able to negotiate any repairs. It’s banks, not homeowners, who are trying to offload a foreclosed property—and they’re not known for budging when it comes to negotiating home repairs. Most of the time, when you buy a foreclosed home you’re buying it “as is,” meaning all of its good parts and its bad parts. If you’re buying the home to flip, you’ll need to make sure that you have a very thorough inspection performed so that you know what you need to budget for in terms of fixes.

But you may be able to negotiate price. Don’t assume that just because a bank isn’t flexible with incentives and contingencies that they’re not going to be flexible with price. The goal for most banks in this situation is to come out in the black on the property, and not necessarily to maximize profit as much as possible (provided you’re not up against a lot of competition). It’s always worth asking for a price reduction, especially if you know you’re up against some of those aforementioned repair needs.

Understanding the difference between how to buy a foreclosed home and how to buy a traditional home comes down to understanding who you’re dealing with—i.e. banks, not sentimental homeowners. From there, you can start to put forth a strategy that sets you up in the best possible position to buy a foreclosed home that meets your needs and your budget.

How to Buy a Foreclosed Home

Alright, now that we’ve covered the basics, here’s what you’ll need to do if you want to buy a foreclosed home.

Get Your Financing in Order

Find a Qualified Agent

Start Actively Looking—and Act Quickly

Determine Your Offer

Wait For Your Closing Date

Always do plenty of research before buying a foreclosed home, both in regards to the property itself and what buying a home in foreclosure entails. It’s not always a simple process, nor are there any guarantees that you’ll be able to make a good return on your investment. But if you do everything right and stay in your budget, there’s a good chance you’ll come out on top.