Seattle continues to be one of the country’s hottest markets, with demand far outweighing supply and houses getting snatched off the market within a week of being listed. If you’re looking for alternatives to fighting the competition for a new home, purchasing a foreclosed home might be the best thing for your current situation.
The process of searching for a foreclosed home to buy is similar to any traditional house-hunting journey, with a few key differences and considerations.
What Is a Foreclosed Property?
When people think of a foreclosed property, a common misconception is that they are old, dilapidated, or abandoned homes. This isn’t always the case.
A property gets foreclosed when the homeowner defaults on their mortgage payments and the home gets repossessed by the institution that funded its sale. The home is now owned by that bank or institution until it is sold, put back onto the market, renovated, or demolished.
If you’re interested in purchasing a foreclosed property, you’ll be working directly with the institution that now owns the home rather than the original homeowner, and the process may take a bit longer than a typical property transaction.
[Related: How to Buy Off-Market Homes]
Where to Find Foreclosed Property Listings
Where do you find foreclosed properties for sale? If driving up and down streets looking for boarded up windows or foreclosed signs in front of houses isn’t your thing, that’s perfectly fine. The following are some ways to find foreclosed property listings on the internet.
Popular Free Websites
You can find foreclosed properties for sale on popular traditional multiple listing sites such as Zillow, Trulia, and Realtor.com. However, since these websites mainly focus on selling non-foreclosed properties, you might not find as many options as you were hoping.
Distressed Property Sites
Sites that focus mainly on distressed, abandoned, and foreclosed homes are going to be your best bet when looking for comprehensive listings for sale. Foreclosure.com, FSBO.com, and other sites specializing in listing foreclosed homes will give you a good idea of what’s available in your area and price range.
Auction sites such as Auction.com and HUDForeclosed are also great online resources when it comes to looking for foreclosed properties for sale.
Be forewarned, auction houses and sites often don’t allow home inspections or legal pre-sale viewings, so purchasing a home this way is considered risky. At the same time, you most likely will have less competition and can walk away with a great deal on a foreclosed property well below market value.
Government Agency Sites
Another type of online resource to find foreclosed homes for sale are the websites for government agencies like Fannie Mae, the Federal Housing Administration, the Treasury Department, or the Small Business Administration (for commercial foreclosed properties).
Before you make the first move to begin your home-buying journey by making an offer on a foreclosed property, you should get pre-approved for a mortgage. This step is important, since being pre-approved will let you know how much money you’ll have to offer, and what properties you can actually afford.
If you skip getting pre-approved, you’re going to risk being denied on the sale, and your process will take a lot longer. Be as prepared as you can be in order to quickly and efficiently purchase the foreclosed property you have your eye on.
[Related: Supporting Documents for Loan Approval]
Look at Real Estate Comps
Real estate comps are great resources when you’re trying to find the right foreclosed property to make an offer on. Real estate comps are recently sold properties that have similar characteristics and features to the property you are thinking about purchasing.
If you find an accurate real estate comp that is in the same area you’re looking at, is the same size and has similar features to the foreclosed property in question, you can make an informed estimate. Studying the market through real estate comps will assist you in knowing what you’re looking for and how much you should be prepared to offer.
Work With an Experienced Real Estate Agent
Remember, unlike purchasing homes straight from the seller or a traditional active listing, when buying a foreclosed property you are dealing directly with the bank or institution that owns the home. Working with a real estate agent who has experience in buying foreclosed homes can help. Experienced agents or ones who specialize in foreclosed properties can assist in the entire journey from looking for a property to closing the sale.
Foreclosed homes can give the buyer the opportunity to pay below market prices and find a great deal. Even if the home is a fixer-upper or in need of renovation and repairs, you may be able to create a great long-term investment with the foreclosed property.
Contact Seattle Mortgage Planners Today!
Are you getting started on your home-buying journey? Seattle Mortgage Planners can help you with everything, including the mortgage process, finding the best rates, and even what neighborhoods to look for your future home in. Contact us today and let’s get started.