Foreclosure in Midtown>Question Details

Npinto, Home Buyer in Midtown, Sacramento,...

How do I buy a foreclosure?

Asked by Npinto, Midtown, Sacramento, CA Thu Feb 4, 2010

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Elizabeth Weintraub’s answer
There are basically 3 ways to buy a foreclosure --

1. Through a real estate agent as a bank-owned home listed on MLS.
2. Directly from the bank, either in bulk or as a single purchase (although most prefer bulk sales)
3. On the courthouse steps.

Your best bet, price-wise, is generally option #2. Option 1 and 3 are typically competitive. However, if you buy a foreclosure through a real estate agent, you should hire your own buyer's agent -- an agent who has experience dealing with REOs. They are a totally different animal than a regular sale.

In those situations, you often end up in escrow in southern California, which is a nightmare in itself. Not to mention, the bank's lengthy and multiple-page addendum removes most of your rights from the California purchase contract. Sometimes the banks insist on non-refundable earnest money deposits, which means you better be prepared to do your home inspection immediately. There are a lot of nuances to those transactions.
1 vote Thank Flag Link Thu Feb 4, 2010
Dear Npinto: I am assuming from your question that you are asking how to buy a foreclosure at the courthouse steps. I will answer your question as I have interpreted it.

1. Identify the property you want to pursue.
2. Determine market value of that property.
3. Find out the minimum bid that the lender will accept at the auction at the courthouse steps.
4. Find out all you can about the condition of the home (without being able to see the inside and without trespassing on the property).
5. Find out all of the liens on the property and their position in priority to be paid.
7. Have your bank where you have the sufficient cash on deposit issue a cashier's check for the minimum bid amount and have additional cash so you can pay the full amount of your bid if you are the successful high bidder at the courthouse steps. YOU CANNOT COME WITH A LOAN FOR THE PURCHASE OR WRITE A CHECK "LATER."
8. The day before the bid, call the Trustee and see if the auction has been postponed. Most are today.
9. Go the courthouse early the day of the the auction and check the general index and the property index to determine if any last-minute liens have been placed against the property or the current foreclosed owner.
10. You will need a lot of time to reasearch a property. If you don't have that time, hire a professional REALTOR who knows how and be prepared to pay for their priceless services.

It's risky business, but can be very rewarding. Have fun.

Erin Phillips
KW Research and Development Investors
Keller Williams Realty
Web Reference:
1 vote Thank Flag Link Thu Feb 4, 2010
Hi there,

The information from the agents below is right on point. Just to summarize, the Sacramento, CA area industry standard is as follows:

1. Know what you can afford - Attain a preapproval letter from a lender or ensure you have supporting documents if you plan to pay cash. This is referred to as "proof of funds".

2. Find a good REALTOR - There are varying types of real estate agents out there. But the one that may best serve you will be a REALTOR, full-time, and with the experience needed to help you navigate this challenging market. You will provide your agent with the pre-approval or proof of funds (or both) right up front. This lets the REALTOR know that you are serious and ready to move forward when you identify a home.

3. Identify your "Must Have's" and "Can't Stands" - Your REALTOR will go over this checklist with you which will also include the area you desire, square footage, bed/bath requirements, etc.

4. Check MLS (MetroList Services, Sacramento service provider) - I recommend ONLY using this database because sometimes the online property websites are delayed with the statuses of the properties, and by the time you see something you want, it may no longer be available. Your REALTOR can set up a client portal for you which displays properties available in real-time. The REALTOR can also choose to send you ONLY foreclosures or sometimes they are referred to as "Bank Owned" and "REO's" (Real Estate Owned, a terminology the banks use to identify what's on their books).

5. Once you identify a property, because you took the steps above, you are all ready to go! Your REALTOR can submit an offer on your behalf and you have increased your chances of aquiring that property because you are prepared in avance and know EXACTLY what you want. Hope that helps!

Happy House Hunting!!
1 vote Thank Flag Link Thu Feb 4, 2010
If you are talking about buying a home after it has been taken back by the bank, start by getting your financing in order. You will be required to provide proof of funds if paying cash or a pre-approval from a lender (most often a direct lender) if you will be obtaining a mortgage.

Then find a Realtor that is familar with the area you want to live in, be patient there is a lot of competition out there for the good properties, good luck.
0 votes Thank Flag Link Thu Feb 4, 2010

Supply and demand are factors that drive the price of products and wages. This dynamic affects the price of homes of all types...

Sometimes the public becomes enamored of a fad such as pet rocks, beanie babies, Pokemon Cards, and buying foreclosures because they are supposed to be such great deals.

When the supply of foreclosed homes drop, but the demand remains high for the word "foreclosure" in a home description then that silly word begins to cost the buyer a premium (as in extra money)

Bank owned foreclosed homes in the retail home sales market are no longer the cheapo bargains that they were from 2007 through 2009. You can get a better deal buying a non-distressed home or a short sale these days.

I would not be shocked by a return to the folly of the 1990's when HUD foreclosed homes sold for an AVERAGE of TEN PERCENT over appraised value. People just loved that word foreclosure and suckered themselves into paying an extra TEN percent (on average) just for that lovely word. "Foreclosure"

Now I'll pay an extra 10% for a great school district, or an extra ten percent for a swimming pool or an oversized lot. I might even pay an extra ten percent for the perfect zip code. But an extra ten percent just because a house has been through foreclosure?? Ridiculous!!
0 votes Thank Flag Link Thu Feb 4, 2010
Jim Walker, Real Estate Pro in Carmichael, CA
Talk to your agent to put an offer for you as you would do with an individual seller.
0 votes Thank Flag Link Thu Feb 4, 2010
Web Reference:
0 votes Thank Flag Link Thu Feb 4, 2010
In response to one of the agent's answers regarding buying directly from the bank, that does not happen often and requires a contact to make that happen. However, never say never. If the person who is telling you to do that can make it happen then give it a shot. Just keep in mind that sometimes people over promise and then under deliver. I'm just sayin'...

Otherwise, you will want to take the appropriate steps necessary to prepare yourself as stated by the other agents on this thread and you will be just as successful as well.
0 votes Thank Flag Link Thu Feb 4, 2010
Ditto to David's response "Prepare yourself to make several offers before you get one. Timing and circumstance will be on your side if your persistent. "
0 votes Thank Flag Link Thu Feb 4, 2010
Wow. You've received great answers to your question. I have found that well priced and decent looking foreclosures are challenging to buy because there's so much competition. So increase your odds by being pre-approved for a mortgage, studying the comparable sales in the area and submitting your best offer since that may be your only shot.

Prepare yourself to make several offers before you get one. Timing and circumstance will be on your side if your persistent.

I wish you well on your home search.

For a free list of foreclosed bank repos, go to
0 votes Thank Flag Link Thu Feb 4, 2010
Buying a foreclosure is just like buying any other property, only difference is that you're buying from the bank because they are the seller. Contact an agent who knows the area. Now is a good time to buy. Good luck!

Walter Espejo, Realtor, SFR - Short Sales and Foreclosure Resource
Web Reference:
0 votes Thank Flag Link Thu Feb 4, 2010
Simply put, you make an offer that is accepted by a seller, fund the purchase and close escrow. Sounds simple, right?

Of course there are a lot more steps involved with purchasing a home and one of the best places you can start is by talking with a real estate agent. A good agent can guide you through the process of getting qualified to buy the home, viewing and making offers on homes and get you to closing.

If you are looking at foreclosures to get into a less expensive home, there are a lot of resaonable priced homes out there right now.

0 votes Thank Flag Link Thu Feb 4, 2010
Hi Home Buyer,
This is a constantly changing housing market, education is Key. As potential buyers or sellers these numbers help you to understand what the price ranges are for bank owned and short sale properties for sale. There is a big misconception when it comes to bank owned properties (foreclosures) and short sales (pre foreclosures). Many are led to believe that there is a fire sale going on, that the banks are giving deep discounts. Banks at this point are in the business to minimize their loss severity, they want to see offers as close to fair market value as possible. In some instances there are listings that are generating multiple offers which results in a higher sale price. Here is where an experienced agent can guide you with these purchases.

You as a buyer need an agent who truly understands this market and can help you get your desired home whether it is a bank owned or short sale listing. With so much information and misinformation you need an above average agent to guide you through these investment opportunities.

My husband and I are Santa Clarita's Certified Pre Foreclosure Specialists, PSC with a Certified Distressed Property Experts designation, CDPE. By dealing with a Realtor who has earned the PSC and CDPE designations, buyer's and seller's ensure that they are working with an experienced Santa Clarita Short Sales Expert that is equipped to handle their specific needs. We want to be the number one real estate agent you call when looking to buy or sell in today's market.

This real estate market has caused unbearable stress and heartache. As a Pre Foreclosure Specialist with a Certified Distressed Property Expert designation we have the training and expertise necessary to minimize our clients financial loss and limit the damage to their credit. We feel that education is key in this market with so much misinformation and foreclosure scams out there, we sought out this education to ensure we could properly help Santa Clarita families get on the path to recovery.

You asked about buying a foreclosure the term 'foreclosure' is a legal action you mean you would like to purchase a bank owned property 'REO'. There is a difference between a pre foreclosure and a foreclosure. The time period between the first missed payment and the final bank sale is called the pre foreclosure phase. Foreclosure is a legal process that is initiated whenever a homeowner defaults (stops making payments) on their mortgage(s). When the foreclosure is completed the home is either sold at auction or becomes real property of the lender and is now owned by the lender REO, Real Estate Owned. Many of you have heard these terms on the news lately or see these types of homes in your communities. Would like to know what these terms mean or understand how the short sale process works? Go to short sale, pre foreclosure definitions.
0 votes Thank Flag Link Thu Feb 4, 2010
Start by finding an agent in your area. Purchasing an REO/Foreclosure is an easy process and not unlike purchasing a home from a traditional seller, only in this case you're buying the home from the bank.

I'm right up the road, give or take 80-miles. Call me or e-mail me, if I can help with a referral. I lived in SAC for a spell, and know the town well.

There are obviously some fantastic deals to be had, and it's a great city to live in.

Good luck,
Eric M. Abrams
CA DRE# R01862927
Web Reference:
0 votes Thank Flag Link Thu Feb 4, 2010
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