Buying foreclosed homes: requirements and qualifications

The requirements for buying foreclosed homes vary state to state.

Buying a foreclosed home might sound like a sound good investment, but there are a number of things to be considered before making a purchase. The requirements for buying foreclosed homes vary depending on where you make your purchase and who sells the property. Every state has its own laws and regulations for the buying and selling of foreclosed properties. Often, you’ll need to work with both a real estate agent or broker and a lawyer.

When you first start shopping for foreclosed homes, you need to differentiate between foreclosure sales, pre-foreclosure sales and lender sales. A pre-foreclosure sale refers to a sale that takes place prior to the actual  foreclosure. The owner of the property has the right to sell his or her building before the lender forecloses - you can often find good deals during the pre-foreclosure sale because the owner wants to sell and make some money before the lender takes back the property.

A short sale occurs when the owner of the property owes more on the mortgage than the property is currently worth. The lender works with the owner, letting the person sell the house and use the funds to pay off the mortgage. Lender sales are completely different because these occur after the lender forecloses on the property and are typically at public auction.

The qualifications for buying foreclosed homes are simple. You need to either have the money in hand to buy the property, or you need to have access to funds to cover your purchase. When buying at an auction, you might find that it's difficult to secure financing from a bank or lender because you do not know the sale price of the home. The auction estimate is amount the lender hopes get for the property, but there is always a chance that the price will be higher, especially if there are several interested parties. Some lenders set a minimum price on the property. The terms of the auction vary from lender to lender. Other requirements for buying foreclosed homes might include working with a licensed real estate agent or registering at an auction prior to the sale date.

Buying foreclosed homes can be confusing for new buyers. Use RealtyNow to find properties and real estate professionals who can help. To look at listings of foreclosed homes enter a zip-code above.