Q:

How can you buy a home that is on foreclosure?

A:

Quick Answer

Foreclosed homes can be purchased at auction or directly from a bank. If a foreclosed home was purchased with a mortgage insured by the Federal Housing Administration, it can be purchased from the U.S. Department of Housing and Urban Development.

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Full Answer

Auctions on foreclosed homes are called trustee sales. Trustee sales can be initiated by the bank that holds the mortgage, or by a taxing authority if the reason for foreclosure was failure to pay taxes. Auctions are held publicly and require a cash deposit to cover costs such as the loan balance. Buyers at auctions should have a letter from a bank pre-approving the amount of their bid not covered by cash.

Banks sell foreclosed properties both individually and in bulk. Buyers interested in an individual property negotiate through a real estate agent assigned by the bank. Banks selling foreclosed homes in bulk deal with buyers or the buyer's broker directly.

The Department of Housing and Urban Development sells foreclosed homes through a bidding process, with priority given to buyers who plan to make the property their primary residence. Buyers find foreclosed HUD homes through signs identifying them as such or through on the HUD website. Buyers must find a registered HUD real estate broker to place bids on their behalf.

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