Updated 2/4/17; Originally published 7/26/16
What are foreclosures? When a homeowner cannot make payments on his or her mortgage, the bank will eventually foreclose on the property. The property goes to the county auction and, if no investor buys it, the lender/bank will buy it back. Usually a few months later, that property will come on the market as a foreclosure listing, selling as-is, and usually at a significantly discounted price.
Foreclosures tend to sell fairly quickly. Banks are not like normal sellers. They will sell the home, eventually. Most banks list their foreclosures on the MLS, just like any other home, and you should use a Realtor to purchase one just like any other home. The longer it sits on the market, the better deal they will give. The longest days on market for a foreclosure in 2017 was 316 days, but the median was just 67 days – from listing to closing. Many of these were sold with multiple offers.
The cheapest foreclosure sold for $20,000 in 2017.
Because of the prevalence of the VA loan in our area, nearly 2/3 of foreclosures are owned by the Department of Veterans Affairs. The next most prominent foreclosure bank in the area is the Department of Housing and Urban Development (HUD). HUD foreclosures can be found on the MLS and the HUDHomestore.com.
Foreclosures often have their own rules and forms, sometimes making them tricky even for Realtors. The VA doesn’t allow e-signatures. HUD Homestore offers must be submitted online after registering. Hubzu or Auction.com properties usually require cash offers. Some, like Fannie Mae Homepath and HUD Homestore, are initially only open to owner occupants – not investors.
While foreclosures can be great deals, it’s not hard to remember that these were people’s homes and lives. Avoid becoming a casualty of foreclosure. Be sure to budget correctly when you buy a home. Watch out that you don’t become house poor. And if you are having trouble making the payments, talk to a Realtor like me to stop foreclosure now.