Buying Bank and Government Foreclosures
We accumulate the listings of foreclosures from several government and banking sources.
Each entity works differently and its procedures for bidding, financing and obtaining properties varies among the different organizations. Go to Frequently Asked Questions for specific questions about each government and banking organization
In all cases, you will need to work with a real estate agent or the contact organization cited with the listing. If you contact the government agency directly they will advise you to have your real estate agent contact them or the contact organization cited in the listing.
There are only a few instances when you may make a bid without a real estate agent or listing organization. These all occur at auctions. When the Treasury Department auctions seized property, when HUD holds a property auction or when you bid at an auction “on the courthouse steps” for property that has been acquired by the courts, you will not use a real estate agent. In these instances, you will represent yourself. (To learn more, go to Frequently Asked Questions)
Where Do You Make the Most Money in Foreclosures?
The authors of this site have purchased property and land through all the mechanisms we are providing you. We have found all to be good sources of discounted property with potential.
The only avenues we do not recommend are HUD auctions and Department of Treasury auctions. This is not because the property is not valuable. It is because we have found auctions that are heavily advertised bring too many bidders and the prices go too high for you to make valuable purchases under market value.
How can I purchase a home for 50% of the appraised value?
If you are a police officer or a state certified teacher, you may purchase a home in a distressed neighborhood for 50% of the market value. The "Good Neighbor" program is administered by the U.S. Department of Housing and Urban Development to revitalize neighborhoods.
The home price is reduced by 50% of the appraised value upon the closing of the sale. Participants also can make a down payment of as little as $100 with FHA financing.
Both police officers and teachers must agree to live in a property for at least three years. Teachers are restricted to buying property within their school districts. Contact your local HUD office in the blue pages of your telephone directory under "Federal Government" or contact your local real estate agent.
What about Foreclosure Land and Commercial Structures?
These listings are primarily single family residences. Occasionally there are listings for land and commercial structures.
Several of the authors of this site have purchased land and commercial structures and made a profit on them.
Just as in residential real estate, location is everything. With commercial structures you are looking for no structural problems. With land be aware you will be paying taxing on vacant land. If you are buying it to resell later, make sure the taxes do not slowly eat up the profit you were expecting to make. Also, be aware of zoning, future water availability and street plans.
Do You Ever Buy to Resell Quickly?
Sometimes, after completing the repairs and cosmetic work, the property has become highly valuable. At that time you may wish to sell. You should always check with your accountant to see how the capital gains from the sale will affect your federal taxes.
Can the Houses be Used for Rentals?
This is determined by your lender. If you are buying the property as a primary residence, you will be expected to occupy it for one year.
Do the Government and Banks Provide Financing?
In some cases they do. The VA has special programs available on their properties for non-veterans. FDIC does not. Freddie Mac does. FNMA does not. All properties at an auction require a letter of credit and cash for the purchase within 24 hours of your bid. (Go to Frequently Asked Questions for more details)
Do the Government and Banks Make Repairs?
Most properties are sold “as is.” Therefore you must choose carefully and have the property inspected. In many instances the power is not on at the home, so air-conditioning and heating systems cannot be turned on.
Also remember that each property should be inspected for termite infestation.
Use accredited inspectors before making an offer.
The only exception to this is Freddie Mac, which has a program for repairs.
Will the Government Take a Contingency Offer?
A contingency offer-- an offer based on you selling another property before you will buy this one--is not accepted by the government or bank foreclosure resellers.
How Can I Pay Almost Nothing Down?
With very good credit, some mortgage companies will give you a mortgage and a second mortgage for home improvements. With this arrangement you are putting down very little cash.
If you have a large amount of equity in another house, many times a bank will give you a line of credit against that equity which you can use to purchase another house. Again this is “no money down.”
Also, if you are a Veteran the VA will allow you to buy a house with “no down payment.” You will be responsible only for a small amount of closing fees.
The VA has many listings for non-veterans which require only “$500" down. We point those out on the list for you.
HUD has some listing for nothing down, but not nearly as many as the VA.
Many times individuals who are in a hurry to sell a property due to a death, divorce or other circumstance will sell a house and finance your down payment--making it “no money down” for you.
One of the authors of the site “traded” a piece of land for another piece of land with a house on it. Again, no money down. g
A builder may “trade” one house for another. This generally occurs when a builder has too many new properties for sale at one time and will use yours to sell quickly and acquire cash.
Banks with foreclosures many times will offer special financing to sell their repossessed properties. For example: Citibank foreclosures.