Home Buying in 92845>Question Details

Saydee Gibson, Home Buyer in Yelm, WA

When buying either a foreclosed home or action home do you need the full amount in cash? Are you able to get a loan from a bank in place of cash?

Asked by Saydee Gibson, Yelm, WA Thu Dec 26, 2013

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if you are buying a property at auction you will not only need all cash, but you will be bidding against veteran investors, have no ability to do inspections, and could have issues with getting clear title.
1 vote Thank Flag Link Thu Dec 26, 2013
In addition to the great info already provided by my real estate colleagues, home buyers may be able to get deals on foreclosures, which are often discounted in price, but buying foreclosures can be risky. It's essential to understand the pros and cons of buying a foreclosure before making a purchase.

First of all, there are several types of properties that are generally known as "foreclosures." A "pre-foreclosure" is a home which is in danger of falling into foreclosure, but is still owned by the homeowner. A "foreclosure" is a property that will be sold or repossessed by a creditor or a lender to recover the amount owed on it.

While pre-foreclosures are available for purchase from a homeowner, foreclosures can be bought at auction or as "bank-owned properties" (also known as "real-estate owned" properties) from a lender.

Pros of buying a foreclosure: You may be able to purchase a home at a lower-than-market-value price. If the home is in pre-foreclosure, the homeowner is looking to sell the home to avoid going into foreclosure. These homeowners are usually in a hurry to sell, putting buyers at an advantage.

Banks are sometimes willing to offer foreclosures at a discount -- the longer they hold these properties, the more it costs them in terms of taxes, maintenance, etc.

Foreclosures can be found at all sorts of price points (starter homes, luxury homes, etc.) and sometimes are only in need of minor repair or upgrades. With some sweat equity, repairs and upgrades, a homeowner can turn a foreclosure into a home and see some appreciation in the property's value.

Cons: Since foreclosures are often offered at significant discounts, you may face steep competition and bidding from other buyers.

However, foreclosures aren't always offered at a large discount. Homeowners in the pre-foreclosure stage may price a home higher than it is worth in the hopes of paying off a mortgage, taxes, etc. Banks are looking to recoup at least what's owned on the house, so they may only offer a slight discount.

If you are buying a foreclosed home at an auction, you may have to pay cash (the same day!) and may not be able to inspect the home before purchase.

Some lenders don't offer loans for distressed properties.

Foreclosures may need serious and costly repair. The previous owner might not have been able to afford fixes for the property and may have allowed it to fall into disrepair.

Many, not all, Foreclosures are often vandalized and looted; it's not uncommon to find major appliances missing, holes kicked in the walls and other vandalism.

Foreclosures tend to sit vacant for periods of time, which causes major maintenance issues. If a home is not maintained, its pipes could freeze, vermin and bugs could settle in and mold could grow.

You need to do your research -- a foreclosure can have liens attached to it. You may find yourself having to pay costly old debts associated with the property.

Foreclosures often are sold as is and banks often aren't interested in making or footing the bill for repairs.

At times, foreclosure buyers have to start eviction proceedings and pay legal fees to get the previous tenants/owners out of the home.

Purchasing a home from a lender can be a lengthy and time-consuming process that's full of red tape.

Don't let this scare you, the bottomline is to do thorough research before proceeding; I am sure there are many happy stories of success foreclosure purchases.
0 votes Thank Flag Link Fri Dec 27, 2013
Yes you can but you have to have the loan secured and approved. Have you had that done?

Alex Greer
Loan Officer
NMLS #1056079
http://www.TheMortgageOutlet.com

408-352-5147
AGreer@TheMortgageOutlet.com
0 votes Thank Flag Link Fri Dec 27, 2013
Typically on a foreclosed home, you are able to finance it with a mortgage. Keep in mind there may be additional costs and different time restraints involved with a foreclosure.
0 votes Thank Flag Link Fri Dec 27, 2013
I recently wrote a blog about finding foreclosures on Trulia. I'll put a link to it in the web reference below. that should answer all of your questions.

J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
0 votes Thank Flag Link Fri Dec 27, 2013
If buying the home at action you will need to have the full amount in cash, you will be bidding agaisnt investors and you will not be able to do your inspections. If the home is listed on the MLS and providing the home is liveable condition you will be able to obtain a loan for the home.

Please call or text me at the number shown below so that I can help you with your real estate needs.

Regards,
Penny McCann
Keller Williams Realty
562-370-5574
pennysellshomes27@gmail.com
CALBRE# 01925479
0 votes Thank Flag Link Thu Dec 26, 2013
If the property has already been foreclosed and is now listed with an agent by the bank, you will likely be able to use a mortgage and close the traditional fashion.

If you are attending a Foreclosure Auction at the courthouse, you will need "cash" / Cashiers Checks for the full amount. A word of caution - make sure you are bidding on the actual property and not just 2nd lien. A very large well known bank has been known to send their 2nd mortgages to auction for purchase by unsuspecting buyers.

Good luck!
0 votes Thank Flag Link Thu Dec 26, 2013
Foreclosures that are on the mls may be financed with a mortgage. To the best of my knowledge, homes sold at auction are for cash.
0 votes Thank Flag Link Thu Dec 26, 2013
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