How likely is it that I would have to pay in cash for a foreclosed home?

Asked by Kathleen, Orange County, CA Fri Jul 4, 2008

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AJ Heidmann, Agent, Arlington, VA
Wed Jul 9, 2008
If you bid on the courthouse steps, you will almost certainly (99.9%) need to settle for cash, a mortgage does not count as cash in this scenario. If the home has been foreclosed and is now listed in the MLS, it is like all the other homes in the system, financing with a strong, fully pre-approved lender letter will do.

Good luck!
1 vote
Cynthia Doyle, Agent, Las Vegas, NV
Wed Jul 9, 2008
Unless it is disclosed in the listing that only cash is accepted, you should be ok with regular financing lined up. Most banks will require you to be pre-qualified prior to making an offer on a REO. The only time I've come across cash only deals were usually homes in very poor condition (i.e.:structural damage).
1 vote
Robert MacLe…, Agent, Huntington Beach, CA
Sun Jul 6, 2008
You don't have to pay cash for a foreclosure. That is a rarity. To obtain a foreclosure in this market you just have to be well prepared. Be ready to compete with multiple offers, Make sure you have all of your financing and proof of funds ready to go. Banks have such an inventory of REO's that they are putting them on the market below value to generate multiple offers, to sell them fast. Just make you offer as strong as possible.
Call or email with any questions.

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1 vote
Rich Littlef…, , Huntington Beach, CA
Tue Jun 16, 2009
Many foreclosed homes are in such a condition that most lenders will not lend against them. However there are always some lenders who will. They may be a lhigh on the fees and rate though. I almost always can find these types of lenders if you need any help.
0 votes
Vivian Young, Agent, Huntington Beach, CA
Sun Feb 15, 2009
In order to answer that question I need to ask you several questions. Write me offline at Thanks!
0 votes
Kurt, , Anaheim Hlls, Anaheim, CA
Sun Feb 15, 2009
Hello Kathleen!

As a foreclosure expert who represents the banks............the following is a successful gameplan for buying a foreclosure:

1) Understand that to determine the price the bank has the home appraised and prices it from the start $10K-$30K below the current prices of the surrounding homes

2) Keeping #1 in mind........buyers must understand that a FULL PRICE OFFER is a MUST!!...Re read # 1 then #2 should be clear!,,,By definition then...the home is already a great price since it is discounted already from the current DEPRESSED PRICES.

3) If you do not understand #1 and #2 there will be plenty of buyers that do.......this is why many buyers FAIL to buy foreclosure homes

4) Banks look for the most secure financing when entertaining multiple offers from buyers on the same house......what makes YOUR offer stand out is LARGER DOWN PAYMENT.......and CONVENTIONAL FINANCING.

5) Buyers must understand that if their loan has CONDITIONS in order to go through........FORECLOSURE HOMES will NOT MEET THOSE CONDITIONS.......your lender must approve the home AS-IS!!

6) Ask yourself as a buyer.........Why am I running around submitting LOWBALL OFFERS when there is NO CHANCE OF SUCCESS?????...... review #1 and #2 above........

7) If your agent is not a foreclosure EXPERT..........forget buying a foreclosure..........

8) Buyers must be pre-approved by a lender..........or the buyer's offer will be REJECTED OUTRIGHT.

9) Over 1/2 of ALL LISTINGS are in some stage of foreclosure...........if your agent does not know the difference of the many different kinds of financially distressed properties....YOU ARE WASTING YOUR TIME.

10) Knowing when a NEW FORECLOSURE hits the market......and knowing in REAL will have NO CHANCE buying the property.......If your agent does not have you on LISTINGBOOK technology......GET A NEW AGENT!

11) There are GREAT LOANS available for buyers of REO/FORECLOSURE HOMES......Your agent should know this right away.......these loans can help you with needed repairs.

12) Many foreclosure homes need cosmetic repairs..........this is where the BUYER MAKES MONEY!!

Thia is a ONCE-IN-A-LIFETIME BUYERS MARKET..........however, navigating it takes an EXPERT.

Kurt Steinhebel
Century 21 ** Orange County
Foreclosure/Investor Expert
0 votes
Oc Buyer, Home Buyer, CDM
Mon Jul 7, 2008
Mixed luck buying an REO Michael? There isn't any luck involved... if you are a qualified buyer with a pre approval and are willing to pay a price that the bank will accept, the bank will gladly sell you their non performing asset. I agree that a serious buyer needs a good agent, but a good agent is someone who will speak the truth about the current state of the market and be a strong negotiator. I find your statement a bit misleading to people who are wanting to know more about foreclosures.


Be very wary of agents who try and tell you that we're hit bottom and that now is absolutely definitely a great time to buy. You'll be better served by one that is honest and up front with you.
0 votes
Michael Barr…, Agent, Irvine, CA
Sun Jul 6, 2008
Hi there Kathleen, It is un,ikiely that you would need to pay in cash for a Foreclosed Home. If you were buying a truste sale off the courthouse steps requires this but not for a forclosure. There are many things that you need to have ready to buy foeclosure. Many buyers have mixd luck with this. You need to work with a realotr who is experienced with these type of transactions to inccrease your odds of getting one.

If you have any questions on this please let me know
Kind Regards
Michael Barron
First Team Real Estate
(714) 552-6917
0 votes
Sandra Carli…, Agent, Newport Beach, CA
Sat Jul 5, 2008
Hi Kathleen,

Unless you are attempting to purchase the foreclosure at auction, it's not likely that you would need all cash.

If you would like a chance to have your questions answered about foreclosures (short sales, bank owned,REO's), feel free to stop by my office here in Newport Beach Wednesday, July 9th at 7pm. I do a FREE foreclosure seminar for consumers every other week. I'd love to see you there.
0 votes
Lisa Cartola…, Agent, Oakland, CA
Sat Jul 5, 2008

When purchasing a foreclosed home that is listed on the MLS for sale, you can use cash but conventional financing as well. Different banks who are listing the homes can have different guidelines for offers, but typically I have seen conventional financing used for the purchase of these homes.

Good luck!

Lisa Cartolano
Alain Pinel Realtors
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0 votes
Ute Ferdig, Agent, Newcastle, CA
Fri Jul 4, 2008
Hello Kathleen. Unless you buy at a trustee sale (on the court house steps), you most likely don't have to pay cash. Foreclosed homes are mostly sold through the MLS or large auction houses and they usually allow financing through a loan. If I were you, I would not attempt to buy a house at a trustee sale. Aside from having to come up with cash, you also don't have an opportunity to inspect the house before you buy, which is a risky undertaking. Last but not least, the opening bid at trustee sales is many times more than what the house is worth.
0 votes
Linsey Plane…, Agent, Rancho Santa Margarita, CA
Fri Jul 4, 2008
The bank's priority is a qualified buyer and the highest bottom line net they can achieve on the property. As a matter of fact, I'm finding that even my buyers that are willing to pay cash and close quickly don't necessarily have a big advantage. If they are competing with strong buyers (20% down) that have a higher offer, the cash buyer still may not get the property. The bank is about the bottom line and a closeable escrow.

Good luck and if you have other questions, don't hesitate to ask.
0 votes
Thom Colby, Agent, Irvine, CA
Fri Jul 4, 2008
Very unlikely you would be "required" to pay in cash - I've not heard of that as yet. As Susan said, provided you have good credit with a good down payment and have been pre-approved by a well-known / "national" lender you should have no problems what-so-ever. If you would like more information or are seeking an agent to help you in Southern California, please call or e-mail me - or 949-887-5500. Please visit to search the MLS for your new home!

Thom Colby
Alinea Properties
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0 votes
Dallas Texas, Agent, Dallas, TN
Fri Jul 4, 2008
Bank the does not care how you pay for home foreclosure, you need to show proof of funds from your banker.
0 votes
Susan Wesely, , Saint Paul, MN
Fri Jul 4, 2008
HAVE to pay cash? Not likely, but probably depends on the property. Sounds like you need a buyer's agent to represent and educate you,and a loan officer to determine what you can aafford. You should be able to get a mortgage on a foreclosed home, assuming you have good credit and the home appraises for at least the loan amount. Even if you need to make repairs, there are mortgages that provide for that.
0 votes
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