Finding foreclosures near me can provide the investor with a generous income with the right investment strategy. But how do you get started?
Table of Contents
- What Are Foreclosures?
- 7 Best Ways to Find Foreclosures Near Me
- How to Buy a Foreclosed Property
- The Pros and Cons
- Final Thoughts
Before the crisis in 2007 and 2008, looking to purchase foreclosures was considered a pretty risky investment. But thanks to the evolution of the real estate market, it is now viewed in a completely different way.
Looking up “foreclosures near me” owned by banks or other lenders can turn out to be very profitable for the investor.
It’s worth noting, right at the start, that this type of investment has its fair share of good—and bad—sides.
Therefore, it is imperative to get acquainted with both to succeed in realizing your investment strategy in the best possible way—and avoid possible legal problems.
Stay tuned to learn about foreclosures in more detail—including the best way to find them and the advantages and disadvantages of investing in this type of property!
What Are Foreclosures?
First and foremost, we will focus our attention on the definition of foreclosures and tell you a bit more about how they work.
Foreclosed properties are, in essence, properties that the lenders seized due to the borrower’s failure to pay their obligations on time—pay their monthly mortgage payments, for example.
During the 2007 and 2008 housing market crash, there were a handful of such examples, and buying them posed a risk because profits were uncertain. But as we said earlier, it’s a completely different story today.
What is the process behind foreclosures?
After the properties have been labeled as “foreclosed,” potential buyers (and investors) can bid for these properties online or through Sheriff’s auctions. Alternatively, they may also purchase directly from the lender.
Here, it’s key to note that foreclosed properties can be the result of a divorce, bankruptcy, or disability; many financial hardships may lead to a foreclosure.
Now that you’re familiar with the definition, let’s get on with finding foreclosures.
7 Best Ways to Find Foreclosures Near Me
Digging into the “essence” of these types of investment properties aside, the act of finding foreclosures is still the most difficult step. So, let’s get into that right away, shall we?
Here are efficient ways of finding foreclosures for sale near me.
Naturally, our first recommended method of finding foreclosures is to use the reliable investment tools offered by Mashvisor.
You have two options before you:
The first option would be to make use of Mashvisor’s Property Marketplace tool.
It is common knowledge that not all properties on the real estate market are listed. Well, this tool allows the investor to research even those that wouldn’t pop up on MLS otherwise—one of the categories being foreclosed properties.
Another way would be to subscribe to our Expert Plan, which also gives you the opportunity to conduct in-depth and detailed research on any foreclosed property. That can be done by using filters that narrow down your search to a specific type of property that you are interested in.
Overall, it’s a great way of finding a “diamond in the rough,” so to speak.
2. Online Auctions
Another way of finding house foreclosures would be to go with the online approach. And luckily enough, technology has made it possible to purchase homes from the comfort of your own.
As we said, this is done by going to sites that are specifically designed for this and taking part in auctioning. Be aware that you won’t be the only one that’s interested, though.
You must be prepared to fight for your property of choice.
Sites that could serve as possible alternatives are Auction.com and Williams and Williams.
Now, when the auction is finished, and you get hold of the property you wanted, it could take an additional 15 days for the property seller to approve your bid. So, patience is part of the process, as well.
Here’s another thing to remember when choosing this approach to finding foreclosures:
You should bear in mind that the property you’ve bought might still be occupied. That means you may be expected to take care of eviction proceedings—and other actions necessary for the place to clear out—before you can continue with your investment plan.
3. Sheriff’s Auctions
Unlike the previous way of finding home foreclosures near me, this one’s a little different. It’s traditional—which means that it’s not done online.
Sheriff’s auctions most often take place in a courthouse and will typically occur right after a lender has sent out a notification to the borrower regarding the default in payments.
Essentially, it’s a way for the lender to be compensated as soon as possible for the loan that was defaulted on.
The process is regulated and carried out with the assistance of law authorities. Note that the process may take a little longer than the online method we’ve mentioned, though.
These auctions are commonly advertised in the local newspaper. For example, a duplex for sale that has been acquired by the lender for default in payment could now be found in the “Sheriff Sale Auction” section.
4. Bank-Owned Property
Your next option would be finding bank foreclosures near me.
These properties are actually the ones that don’t make it on auctions—be it online or offline ones. So, any property that doesn’t end up getting sold at an auction automatically returns to the ownership of the bank.
By definition, they become real-estate-owned property or REO.
The fact that they didn’t do well at the auction means that they’re often discounted and sold to the investor “as is.” That way, the bank can get back at least part of its money as quickly as possible.
A lot of these types of homes for sale are considered distressed properties.
5. Through a Real Estate Agent
We have mentioned all these legal procedures and sites that you should look up when researching foreclosed homes. So, we’d like to add something:
You shouldn’t forget that you can do so by connecting with real estate agents in your area.
If you know a real estate agent who can help you with this, get in touch with them as soon as possible. Alternatively, consider joining online groups where local agents communicate.
Preference should be given to real estate agents who operate in the local market since the chances that they know much more about each type of property (both regular and foreclosed ones) are much higher.
That is another proven way to find foreclosures. And since the emphasis here is on communication among professionals from the same line of work, you can look forward to some helpful information.
6. Government-Owned Property
Some foreclosures for sale are properties repossessed by government agencies, such as the Department of Housing Urban Development (HUD) and the Department of Treasury. If you wish to participate in their auction, you will have to submit a request through a real estate agent.
Finally, you could try finding pre foreclosures near me. It’s similar to bank-owned properties that we mentioned a minute ago.
Here, the bank notifies the borrower of the default, as usual. But if the borrower succeeds in selling the property within the period given to them by the bank, they could avoid foreclosure proceedings.
Although this is a win for the borrower, it’s not so good for the investor. That’s why it’s crucial not to get your hopes up with this type of property for sale.
How to Buy a Foreclosed Property
We’ve gone through ways in which you can find foreclosures near me. Now, let’s get into the actual buying process.
Here are the steps you must take:
1. Understand Your Options
Essentially, there are two ways of purchasing foreclosed property—online and offline.
You need to decide on the process that you feel comfortable with. That could be through online auctions, Sheriff’s auctions, banks, or fellow real estate agents.
At first, you may feel intimidated by purchasing a home for sale this way, but don’t be. All you really need here is thorough research—and now you can, especially with Mashvisor’s tools.
2. Know Your Budget
Your financial situation also has a say in the buying process:
Just because you’re researching foreclosed homes for sale doesn’t mean that your options are limitless. You should calculate and stay within your budget.
You don’t want to purchase a distressed property that you can’t afford.
3. Hire a Real Estate Agent
The next step would be hiring a real estate agent to help you with the entire process. That especially applies to beginners who want to go with the traditional route because they need a professional who can give them all the necessary information.
Also, it’s crucial to have someone who has extensive knowledge of the real estate market and property for sale that you are interested in by your side.
4. Get Approved for a Mortgage
You’re halfway through researching house foreclosures near me.
Suppose you have successfully purchased the property. If that’s the case, it’s time for you to get pre-approved for a mortgage and continue with your investment strategy.
For this, the lender will have to check your credit score and determine if you’re able to buy the property in question. Once you get approved, you’ll know exactly how much you’ll have to set aside for the home.
5. Have Your Home Inspected
Bearing in mind that you’ll be purchasing foreclosures that may be distressed, you’ll want to include a home inspection, as well.
You can consider this a preventive measure that can help you a lot, especially if something is wrong with the house. Bear in mind that any future repairs would be your responsibility.
Once the inspection is done, you will receive a written note from the inspector outlining the state and findings of the property. If the results end up being disappointing, you have every right to walk away from the sale.
6. Purchase the Property
If you are satisfied with all the terms, then the final step is to contact your lender to finalize the sale and agree on the loan. With that said, if you are not satisfied, keep looking; we are sure you’ll find something.
The Pros and Cons
Now that we’ve covered the most critical parts, let’s discuss the pros and cons.
One pretty beneficial aspect of investing in foreclosures is that most of these properties are generally cheaper than the vast majority of properties on the market.
And that means you can expect a very generous profit from locating a profitable foreclosure.
Also, while we’re on the topic of finances, you could get lucky and purchase a property that would otherwise be way out of your budget. There are tons of foreclosed homes for sale that are in fine condition and need little to no repairs.
Sadly, it can’t all be sunshine in the field of real estate.
The downside to purchasing foreclosed homes is that, after the inspection, you may find that you’re not satisfied with the condition of the house you hoped to purchase—and you will have to back out.
There’s also the risk of buying a foreclosed property “as is.” That means you’ll be required to put in more effort (and money) than you originally expected.
The last downside that we’d like to turn your attention to is this:
The original owner might be able to sell the property and “steal” your opportunity to proceed with your investment plan.
We’ve successfully covered the topic of foreclosures near me. Let’s just summarize the most important facts once again—and bring this story to an end.
First, investors must be familiar with the definition of foreclosures—and learn how they work. In brief, these are properties that are seized by the lender and put off for auction.
Thanks to the evolution of tech and the real estate market, there are several ways you can research foreclosures near me.
These include online auctions, Sheriff’s auctions, bank-owned property, pre-foreclosures, real estate agents, and many more.
It’s up to the investors to find the method that suits their needs and budget. But that’s not the end of that. They’ll also need to review their financial situation and include an inspection of the property, as well.
Lastly, there are both good and bad sides to purchasing this type of property:
It might be priced less than lots of other available properties on the market—but you should be aware of the risks, mainly the potential repairs and the state of the property.
With Mashvisor, investing in any type of real estate property is as easy as ABC.