Wondering if buying a foreclosure home is right for you? Learn more about the process in this guide on how to buy a foreclosure property.


Understanding different types of foreclosures and ways of securing financing can take some of the stress out of buying a foreclosure home.Β  Take a look at this guide that helps you understand how to buy a foreclosure property and give us a call with any additional questions.

πŸ€” What is a foreclosure?

A homeowner who fails to make their mortgage loan payments on time for an extended period can become delinquent enough to default on their mortgage and begin the foreclosure process. Typically, a homeowner can miss between three and six months of payments before the loan company starts the foreclosure.

Common Reasons Foreclosure

  • Job Loss
  • Excessive Debt
  • Job Transfer
  • Divorce
  • Expensive Repairs
During the foreclosure process, the mortgage lender takes control of the property, has the homeowner evicted, and tries to sell the property.
house with foreclosure sign

🏑 Why buy a foreclosure property?

First-time buyers may find that homes being sold through foreclosure are perfect because they don’t require a large budget. Some investors use foreclosure properties for renovation projects that can be sold for profit.

Tip: Sellers facing foreclosure are motivated to get their home sold as quickly as possible. For this reason, they may be willing to negotiate the asking price and drop below market value. It’s possible to get closing credits and discounts from mortgage lenders and government agencies.
Foreclosure Price reduced

πŸ“± Contact The Wilson Group

We can help!
We strive to make our client’s real estate transaction an overall great experience. Our business model is deeply founded in the fact that it is all about the experience! Give us a call at πŸ“± 804-396-4625.

πŸ“‹ Points to Consider

  • You may need to do post-sale repairs that add to the cost.
  • In most cases, sellers are required to give a history of the property.
  • You should have ample time to get the necessary inspections.
  • Some foreclosures can take additional time to complete the sale process.
Home buyers doing home repairs

πŸ’΅ What are financing options?

Depending on the condition of the home, you may be able to get traditional mortgage loan financing on a foreclosure property. Expect to have a decent down payment for a conventional loan.

If the home needs extensive repairs, you may qualify for an FHA loan that adds in the cost of repairs to the price of the home. This type of loan is based on the value of the property after repairs are made. These loans usually require a smaller down payment.

🏦 Foreclosure Types

Short Sale

During a short sale, the home being sold is on the market for less than the balance of the current mortgage. Short sales take more time and require additional paperwork, but some homeowners prefer this method if they are trying to save their credit.

Auction

The foreclosing lender considers the mortgage loan balance, interest, and additional fees when deciding on an opening bid. If no bids are higher than the opening bid, the property is purchased by the lender’s attorney and becomes an REO property.

Real Estate Owned (REO)

A property that is real estate owned may be held by a bank, government agency, or government loan insurer. This happens most often for homes where the amount owed is higher than the current market value.

Government Owned

Several federal agencies sell properties through a foreclosure process. Check with agencies like Fannie Mae, Freddie Mac, FHA, and the VA. Often, the price is below market value, has a lower down payment, and is easier to secure.

⌚ What can I expect buying a foreclosure?

Timelines vary when it comes to buying a home in foreclosure. The homeowner maintains some rights to the property until the sale is final in some locations, but it’s important to note that the state of Virginia does not have a statutory right of redemption.

Be prepared to make a cash down payment if you buy a foreclosure property at auction. The process can take several hours, and you’ll want to make sure you have all the necessary paperwork. Using a real estate agent during a foreclosure purchase can save you time, but you should still expect the sale process to take several weeks.

πŸ‘¨β€πŸ’Ό How can The Wilson Group help?

We have extensive experience helping buyers just like you with the purchase of foreclosure homes. We handle everything from short sales to conventional mortgage sales. We are here to answer your questions and work on your behalf when it comes to negotiations.

Give us a call!
We strive to make our client’s real estate transaction an overall great experience. Our business model is deeply founded in the fact that it is all about the experience! Give us a call at πŸ“± 804-396-4625.
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How to Buy a Foreclosure Property
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How to Buy a Foreclosure Property
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Wondering if buying a foreclosure home is right for you? Learn more about the process in this guide on how to buy a foreclosure property.
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The Wilson Group
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