How to Buy a Foreclosed Home from a Bank

As the housing market continues to fluctuate, banks are foreclosing on more homes than ever. Buying a foreclosed home can be quite a rewarding experience if you know your way around the technicalities. Foreclosure basically happens when you are unable to make your mortgage payments and the bank takes possession of the home. Depending on your budget, buying a foreclosed home can save you a lot of money as they are usually listed much lower than the market value. If you are looking to buy a foreclosed home from a bank then you will have to do your research and clear all the necessary paperwork.

Instructions

  • 1

    Getting started

    See how long the home has been on the market. For instance, a nice property in a decent neighbourhood will be bought quickly by someone looking for a new home. Be aware of the fact that these homes are on the market for a short period of time and will be sold within a month. Nevertheless, if you are getting a house in a below par area or condition that has suffered because of the mortgage crisis, the house will stay on the market for a long time. The price will be flexible as the banks do not like if they have a foreclosed property for more than three months. Therefore, they will negotiate with almost any buyer.

  • 2

    Price per square foot

    This calculation is another way to know the value of a house. See the average prices per square foot of homes sold in the past two months in the same area. Multiply that by your house’s area to understand the price for your home. For example, if a house is valued at $75 per square foot and there are 1000 square feet, then the overall worth of the house is $75000. Nevertheless, if you follow the average price, you might end up overpaying for the home but it is a good deal if the house is in mint condition.

  • 3

    Cash or mortgage

    If you pay by cash, your deal goes to the front of the bank’s pile of offers. Banks prefer cash payments rather than mortgages. If you are giving $80000 cash for a home valued at $100000. You have more probability of buying the house than the guy offering $90000 in mortgage. Cash stresses that you are a credible buyer and the bank can easily process your application.

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