You can get these properties from many sources:
1. MLS listing of a Lender Owned or Real Estate Owned Property, this is pretty much a normal buyer transaction
2. Get a REO from a bank auction such as REDC (most are on MLS)
3. Buy at the county weekly foreclosure auction (Need cash, no inspection, deed could be clouded), you should get a specialist and/or specialized training and tools to do this right. Let me know if you want to pursue this path.
4. Buy a "distressed" property in foreclosure that is called a short sale. It will be anything but short, but deals can be had for the patient.
5. Another way to buy is from a wholesaler who has distressed properties and all of the above fit into that category. This is also not for the faint of heart.
Use a realtor that is SFR, REOS or CDPE credentialed. It can cost you nothing, and can help you stay out of trouble if you stick to their advice. Be prepared to have to do some fixes that you would normally have the seller do in a normal transaction.
We have experienced buyers agents who can help you with this. Just call or email me if we can help.
The Bandy Team
RE/MAX Professionals - Denver, CO
"From Our Heart to Your Home"
The answer that Grace gave you is "spot on." Work with a realtor who has had short sale and reo experience. We'd love to help you to find your dream home. Certainly with the extension of the tax credit and the fact that some existing homeowners qualify for a tax credit, makes this an ideal time to buy. Contact us if you're not working with a realtor yet! http://www.swanrealtorgroup.com
Foreclosure properties are listed on the mls just like all other homes, or your can buy them at the foreclosure auction. The foreclosure auction takes lots of study and patience on your part and doesn't always pan out the way you think.
The best way to buy a foreclosure is to watch everyday what is coming on the market in the area you like. These properties usually have multiple offers on them very quickly, so you need to be the first to get your offer in.
The best buyer for a bank is someone who is going to purchase the home as their principle residence and has lots of money to use as a down payment. The 2nd best buyer is an Investor who has cash. FHA buyers are the next category, and lastly investors who do not have cash.
These properties typically need some work to be done to them. What that work is varies greatly, some only need cosmetic work, and others need complete remodels. Banks can also take there time answering your offer because they don't work like a typical seller. So buying bank property takes more patience on a buyers part. Its not as bad as buying a short sale but can still be a frustrating process.
If you need more help looking into the whole process let me know and I'd be glad to walk you through it.
With the exception of slightly more "hoop jumping" on the part of the buyer, buying a foreclosure or "bank owned" property is not much different than purchasing a home from a private seller. The only real difference is the wording and requirements within the purchase contract's "Addendum" often attached by the bank. Typically, however, foreclosure transactions are often "as is" (meaning the bank expects you to accept the home in its current condition without their assistance in repairs), made only to prequalified buyers (often the buyer is required to prequalify with a specific lender) , not available to FHA purchasers, and subject to specific time-tables after acceptance of the purchase agreement (for example, many banks want all contingencies removed in 7 days after acceptance of the purchase agreement).
While many may encourage you to enter the real estate market without a Realtor, I would certainly caution against it especially in purchasing short-sale or REO (bank owned) properties. Working with a Realtor who possesses foreclosure transaction experience will give you the best chance to "package" an offer that is acceptable to the bank, while also avoiding the pitfalls that can trigger monetary penalty clauses or even jeopardize your earnest money deposit.
For more information about specific details of foreclosure home transactions in your neighborhood, contact a qualified Realtor with expertise in foreclosure home sales and purchases. Good luck!!
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA