If there is a home that is offered for sale that you wish to purchase then the steps are essentially the same as purchasing a regular home. You need to be preapproved for a loan. FHA is 3.5% down payment so you don't have to a have a huge down payment.

The next step is to write your offer and have the seller of the home approve it. When a bankruptcy occurs all assets are "held" by the court while debts to the creditors are hammered out. The court typically has to approve the offer because they need to determine who is going to get what money from the sales proceeds. When the court approves the offer, then the home is "released" from the bankruptcy which allows the title of the property to be cleared of liens and the home sold.

If the court has already released the home from the bankruptcy, then there really isn't any different that happens in the transaction. If the home is still in the bankruptcy process then the transaction could take longer, and it is possible that the court won't release the home which means it can't be sold.

As for a foreclosure, that is straight forward in that the title has already been cleared by the bank, and the bank owns the property and is putting it up for sale.

When purchasing a property that is in foreclosure, it is usually done to sell the property to get proceeds and distribute the proceeds to the creditors. The listing has to be approved by the court to list the property and then the bankrupcty judge will order a appraisal to establish what the property sould sell. Then the property is market to obtain the appraised value. When the property is sold and approved by the bankrupcty judge all proceeds will go to the bankruptcy court to distribute to the creditors. You should be pre approved but the down payment should not have any effect as long as you are pre approved.

A foreclosed property has already gone through the egal process. The bank is now selling the property to mitigate their loss. But here the asset is the banks and they can sell the asset with out getting court approval.

If it is a pre foreclosure loan then the approval will require the banks approval on any transaction. If there is a accepted offer, the bank will order a appraisal to confirm value and look at the reasons mortgagor should be approved for a short sale. So lots more is envolved than property and value. The reason default and the ability to pay by mortgagor all comes into the decision process.

Essentially, a "bankruptcy home" and a "foreclosure home" would be the same thing. That is, you can only buy a home from someone who has become bankrupt, if the bank is able to take the home back, despite the bankruptcy proceedings. And that is not always the case. A number of people who file for bankruptcy are able to keep their homes, depending on whether they're able to keep making their payments and how much equity they have in the property.

What you really want are those homes that, just like homes that have been foreclosed, were taken back by the bank or mortgagee to be re-sold. Those homes can be taken back through a variety of means but, just as with foreclosed homes, all of those homes are listed through local real estate brokers, whom the banks require to be members of the local multiple listing service. That way, any broker can show you the home, get you more info about the property and help you through the buying process, no matter what broker has the listing.

Generally, banks and managers of foreclosed properties (usu. called REO managers) want to unload their properties as fast as possible. Therefore, they set their prices low. But they expect something in return. They want buyers who already been pre-approved for financing (sometimes with specific lenders), and who have enough cash on hand to write a check for the initial deposit given at the time a purchase offer is given (this deposit is referred to as earnest money.) However, a large downpayment may not be necessary, depending on what kind of financing your loan officer says you qualify for and the price range of the kind of property you want.

If you need a recommendation for a loan officer, let me know, and I would be glad to give you some referrals. Am also glad to anser any other questions that I can.

Best of Luck,

Craig Loughridge
Bryson Realty
Cell: 503-349-6892