Buying a foreclosure is just a bit different. In this case the seller is the actual bank who foreclosed on the previous homeowner. So your offer is sent directly to the person who decides in behalf of the bank, and if accepted you can then enter into a contract of sale. They'll usually require you to do a 203(k) loan, which is an FHA loan that finances up to 96.5% of the sales price and the amount needed to rehab or update the property. You'll need a licensed and insured contractor and may even need a HUD consultant.
The 203(k) loans are not only for foreclosures, it can be used for any type of sale, depending on the properties condition and your desire to upgrade it or not. Also, you don't ALWAYS have to do a 203(k) on foreclosure properties, from time to time you find some that don't really needing work and you can do a conventional or regular FHA by turning the utilities on, again this isn't true most the time but it does happen.
In all loan scenarios you'll need to qualify with your income, credit and assets. The best thing for is to meet face-to-face with a loan officer and see what you can qualify for, if you haven't done so already.
Senior Loan Officer
Sterling National Bank
Tom Brady SFR, e-PRO, SRES, GREEN, BPOR
Licensed Real Estate Salesperson
Notary Public, Retired N.Y.P.D. Lt.
#1 Listing & Selling Brokerage in NY
Charles Rutenberg Realty, Inc.
255 Executive Drive - Suite 104
Plainview, New York 11803
As a first time home buyer I would not ignore these homes. Make sure what you see on line is actual 'for sale' listings. There are companies that publish lists of homes who are in default, but that may not be available for purchase. The distinction is homes actually listed for sale will be listed through a realtor, it's pretty much a bank requirement. If you are patient you can actually get a very good deal on a short sale mostly because of the fact that most home buyers DO ignore them. Smaller buyer pool means lower price, so take advantage.