In the last year and a half foreclosures in the United States have been commonplace. Banks and mortgage lenders have many properties they must sell to recoup their loans. At foreclosure auctions, houses often sell for a fraction of their market value. This sounds perfect for people who want to buy a home, but there are some catches. You probably will not be able to get a standard mortgage for a foreclosure sale.

People who have excellent credit and enough savings for a down payment can save money by buying a foreclosure. In some cases, the lender may set a minimum bid to cover the loan or other expenses. There may be past due taxes or other liens on the property. Title searches which are required for normal real estate sales may not apply to foreclosures.

If you have no desire to move to another area, the local newspaper is an excellent source for foreclosure auctions. There are also listings of foreclosed properties. It isn’t necessary to go to an auction to save on a foreclosure sale. Government insurers have foreclosed homes for sale. You can visit one of the government websites for a listing.

Owners of these houses would rather unload these rather than bother to repair their homes and spend $15,000 or $20,000, and they don’t want to deal with expensive property taxes. If you got a grand and some $30,000 you can get yourself a nice house after the repairs. If this is not your idea, you can get better foreclosed homes with a mortgage or a refinance after making a deal with the homeowner who is facing foreclosure.

If you can’t qualify for a foreclosure sale, your real estate agent may be able to arrange a short sale. In a short sale, the bank agrees to allow the seller to sell the property for less than the amount of the loan. In this way, homeowners can avoid foreclosure. It is much easier to get a standard mortgage for a short sale than for a foreclosure auction. This is more like a standard real estate transaction and the owners are usually still living in the home.

As with any auction, foreclosure auctions require the participants to bid. You’ll need 10% of the purchase price in cash or cash equivalent at the time of the sale. You will also need proof of financing for the balance of the purchase price. If you don’t have proof of financing, your bid will be void. Generally it is easier for people who have enough money for a down payment and very good credit to buy a home in foreclosure. Investors who can obtain commercial loans often bid at these auctions.

There’s the problem of the previous homeowners still staying the property. Once you buy the house during the auction and the tenants have not been evicted, it falls on your shoulders to get them out of the house and this can be a big headache. Or perhaps the house has been vacated but ‘mutilated’ by the previous tenants thereby draining your pocket for additional repairs.

But overall, buying a foreclosed home at a fraction of its original value is becoming the rage in the real estate market. If you are looking for a home or for an investment, foreclosed properties are the way to go. Start your search by looking up foreclosed properties in the different parts of US where you want to live or start an investment.

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