Making Offers on Foreclosure Real Estate

Making an offer to purchase a foreclosure property will depend on which stage of the foreclosure process the property is in. During pre-foreclosure the homeowner still has possession of the property. After foreclosure the property is sold in a public auction. If there are no bidders on the property at the auction the bank who controlled the mortgage will purchase the property.

Making offers on Pre-Foreclosure Real Estate

In pre-foreclosure the owner of the property is facing a pending foreclosure. They are behind on their mortgage payments and if payments are not taken care of by a certain amount of time the bank will foreclose on the loan. At this stage in the foreclosure process, any offers to purchase should be directed to the homeowner.

The owner of the property is likely in need of selling to pay off the mortgage and salvage their credit before a foreclosure does even more damage to their financial reputation. The potential for saving money on the purchase will vary greatly at this stage. Some home owners will be so overcome with the stress of the situation that they may choose to ignore all possibilities as they wait for the impending foreclosure. Others may be open to acceptable offers that will allow them to quickly resolve their debt problem. Though some may hold out for full, or near, market value.

Contact the owner directly and ask them frankly about their situation and their intentions. With some good negotiation a deal may be able to be struck that satisfies both parties. The seller gets out of their tough financial position and the buyer purchases the property at a reasonable discount.

Biding at Auction

You may purchase the property at the public auction but this may require full payment in cash, or cashiers check. Placing a bid at the auction will require that you settle immediately after the auction should your bid be the winning bid. Buying at the auction is for experienced foreclosure buyers who have quick access to significant sums of capital.

If the mortgage on the property is not brought up to date within 3 months an auction date will be set. The foreclosure property can then be purchased at the auction.

Placing Offers on Bank-Owned Foreclosure Real Estate

At this stage, the bank has taken ownership of the foreclosed property. The bank will be selling the property to recover the unpaid remainder of the original mortgage. Bank will usually want to unload these properties quickly.

Contact the lender directly and ask for their asset management department or REO (real estate owned) department. The department that handles foreclosure sales can be difficult to track down as a banks primary business is to lend money, not sell real estate. Be persistent.

Ask how to view the property and how to make an offer to purchase. Usually the lender will clear all titles for any buyer but your purchase should still be contingent upon a title search. Ask if any improvements or repairs have been made on the property or if it is being sold as is. The lender will be looking to recover all money they have put into the property and recover the remainder of the loan. Due to their desire for a quick sale they may accept offers that are well below market value.

Real Estate Directory >  Foreclosure

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