I have read CJâ€™s link and disagree. In Mass, (where youâ€™re enquiring about I presume) the process is completely different. I mean, there are cash auctions, but much of the foreclosures are being listed with real estate agents and posted in the MLS. There will be a lockbox on the door that your buyer agent can access, and you will be allowed to preview it. These properties will be vacant and you will find that most properties will not have electricity and the plumbing has been â€œwinterizedâ€. You will be allowed to conduct a home inspection, but prior to making your offer (in most cases), as the lender holding the deed â€œfrowns uponâ€ offers pending an inspection. If you wish to include the electrical & plumbing in your inspection, you will also bear the cost of turning them back on and off (most likely). Regarding the financing: as long as your fico scores and income/debt meet the lending guidelines, you should qualify for a mortgage. You may even qualify for a 100% financing, as some of my clients have and still are doing this. I hope this helps. The Realtor you choose to help you will be able to take you through the whole process.
The first step would be to get qualified for a mortgage. A lender wonâ€™t even look at an offer unless it is accompanied by proof of financing. Next, ask around to your friends, family, coworkers and neighbors on who they would recommend as a Buyer Agent to represent you and to help locate these types of properties for you. Good luck!!
Absolutely get your preapproval first, then hook up with a buyer agent. In Berkshire County, we have VERY few foreclosures, but the process is not very easy and IT TAKES TIME. If you are trying to buy your first property to take advantage of the tax credit, time is NOT on your side, as you really should have something fully under contract within the next couple of weeks to have ANY hope of closing before the deadline! Home inspectors, appraisers, and attorneys are getting backed up already, and the unexpected always comes up at the worst possible times. Delays WILL be a problem and some buyers will miss out on their tax credit because they can't close before November 30th.
Foreclosures have complicated steps that the lenders follow in processing offers. Its not like you are negotiating with one person - you have to jump through many corporate hoops. It may take weeks, not days, to get any reponse to your offer. Additionally, if someone comes in willing to pay cash, and you need to finance the purchase, even if you are preapproved and your offer is higher, the cash buyer may end up getting the property that you wanted.
Additionally, foreclosures may have problems of which you will be completely unaware. It is unlikely that there will be a seller disclosure of defects - a corporation across the country has no knowledge of the property's unseen "issues". This is the risk you assume when you buy a foreclosed property. It will be an "as is" sale, meaning you will have no recourse if there are problems you discover after the sale. That can get expensive very quickly.
If you need to take advantage of the tax credit, I have to recommend at this late date you should avoid foreclosures. There are a number of really great properties on the MLS, and super buyer agents who can help you every step of the way to help get you closed by November 30th. Did you know that the seller normally pays the buyer agent's fee, not you? Take the free, experienced professional advice that is available to you!!!!!!!
Good luck in finding your first property!
If you are looking at purchasing at an auction, many times the cash only applies.
Sorry for the confusion.
I have to agree with Rebecca. Get a Realtor (preferably a Realtor, not just an agent and also a buyers representative) to help you. Most foreclosures now are listed with Realtors and believe me many are in rough condition. You will need a Realtor or attorney (depending on how your state operates) to help you write contingencies in your offer so that once you have a contract you are not stuck with a lemon. If you don't know what a contingency is ask a Realtor. If you decide to do it alone and purchase county or city foreclosures, I suggest you read a lot on it first and then also go to several foreclosures at the city or county office prior to ever attempting to purchase. Watch and learn from experience people. If you would like assistance finding a Realtor in your area you are welcome to email me at firstname.lastname@example.org. I am happy to assist you with that.
There are many phases of the foreclosure process. Rebecca is spot on if you are dealing with a pre-foreclosure property. Once it gets to auction stage, you normally need to come with a great deal of cash.
Take a look at this link. It is pretty inclusive of the challenges. There are opportunities but it is most important to be working with an expert in the area of foreclosures.