- Real Estate
How to Find Foreclosure Homes to Buy
Thanks for visiting my hub on where to buy foreclosure homes. If you are looking to buy a foreclosure home - whether for your own residence, as a cheap means of entry into the property rental business, or just "flipping" - hopefully the information here will be of immense value to you.
What is Foreclosure?
For most of us, buying a house involves getting a loan from somewhere. In most instances, the lender is a financial institution of some sort: a bank, credit union, etc. They loan us the money, we buy the house, and over the next few decades we pay them back.
Occasionally, however, a borrower is unable to make the requisite mortgage payments. When that happens, the lender has the right to take the property and sell it in order to recover the balance of the loan. This process is known as foreclosure, and sadly, statistics show that foreclosure rates are pretty high these days.
Finding Foreclosures: Banks and Financial Institutions
One of the first places you probably want to look in terms of finding foreclosed properties is financial institutions: banks, credit unions, etc. Basically, these are instituitons are quite commonly the lenders, and when forclosure becomes necessary they are the organizations that find thems in possession of the property. However, these institutions are first and foremost in the business of lending money; they're not wild about having to own property and will be looking to offload any that they end up with.
That being the case, it's probably worthwhile to call local financial institutions and find out how they dispose of foreclosures: public auction, private auction, what have you.
Builders and Realtors
Next, it's always a good idea to touch base with realtors. Many times they will know not only of properties that are in foreclosure, but other properties that are on the cusp of it, and whose owners are quite likely very motivated to sell in order to avoid foreclosure.
Also, it may be worthwhile to touch base with builders and developers in your area. In many instances, the builder/developer may also offer financing, in which case they sometimes end up with foreclosed properties on their hands.
In addition, builders and developers often take on a construction loan in order to build a house. After completion, they find themselves in the position of having to start making payments on the property if they haven't sold it. (Such properties are known as "spec homes," because they are built on a speculative basis, with the builder assuming that he will have a buyer by completion.) Thus, while not actually in foreclosure, you can often get a good deal on these spec homes because the builder/developer wants to get rid of them.
Government auctions quite frequently are seen as a cheap source of all kinds of property: equipment, cars, etc. Even houses.
Some of the houses sold will be foreclosures, but others may be property seized by the government for various reasons: criminal activity, failure to pay taxes, abandonment, etc. Regardless, the price of the property sold is often exceptionally low, so you can find real bargains here.
Often, if the property at issue is actually private property that is being auctioned to satisfy a judgment or in association with a foreclosure or tax lien, the local Sheriff's office is likely to handle the auction. This event is generally known as a "Sheriff's sale" or "Sheriff's auction."
Newspapers, Online and Classified Ads
Next, you can often find forclosures advertised in your local newspaper or neighborhood news sheets. You can also try classifieds such as Penny Saver and Nickel Saver. And of course, there are online sources such as eBay and Craigslist.
Also, if you are in the market for a foreclosure home, don't forget that you have the option of advertising for such. That way. motivated sellers will come to you, rather than you having to seek them out.