When a lender completes the foreclosure process and becomes the legal owner of a home, the property is soon listed back on market for resale as an REO (Real Estate Owned). Buying a foreclosed home is frequently thought to be great way to get a deal on property.
Though foreclosed homes often offer savings, not everyone is in an ideal situation to get involved in the purchase of a foreclosure.
You are prepared to deal with the red tape that surrounds buying bank owned homes, including doing plenty of paperwork and jumping through extra hoops.
Your timeline is flexible. Some lenders will want you to close very quickly and others may run into unexpected delays, usually surrounding title issues. Be prepared for either!
You have a conventional loan, rehab financing or cash to purchase the home. If you have FHA, USDA or VA financing, your lender will expect the property you buy to meet certain property conditions. Many banks won't turn on the utilities or make repairs to satisfy your lender.
You are prepared to deal with a home that is not move in ready. It is the rare foreclosed home that needs no work. You should have the experience and the contacts to get house repair projects done.
You are prepared for the frustration of dealing with a very difficult seller that doesn’t care about the transaction very much. DON'T TAKE IT PERSONALLY!