More Bang For Your Buck: How to buy a foreclosed home - NBC12 - WWBT - Richmond, VA News On Your Side

More Bang For Your Buck: How to buy a foreclosed home

(Source: Wikimedia Commons) (Source: Wikimedia Commons)
RICHMOND, VA (WWBT) -

The lack of houses for sale is driving demand and causing prices in Central Virginia to spike. That puts home ownership out of some people's reach.

But what if you could get a house for less than market value?

It's unfortunate, but sometimes people lose their home to foreclosure. The first notice the public gets is the trustee sale in the daily paper.

"That's actually a step before it makes it to the normal real estate market," said Agent Max Williams.

Williams says don't get your hopes up with these listings. Many never sell because the owner files for bankruptcy.

"Or there's actually no equity in the property and it's extremely difficult, if not impossible, to get traditional financing for a house you buy at the courthouse steps," he said.

When they do sell on the courthouse steps, potential buyers cannot inspect inside the home. So most of them go unsold, reverting them back to the lender. Those lenders then contact certain local realtors, like Williams, to sell the home.

"HUD's properties technically are foreclosures, (but) they don't refer to them as foreclosures, they refer to them as HUD homes, but they went through the same process," he said. 

The only difference is the HUD home had an FHA insured mortgage. Just because it's a HUG or foreclosure doesn't always mean it's an attractive price.

"The valuation process, especially for homes that need work, can be subjective. If they are high or low, that will result in what the home is listed at," Williams said. 

He's seen this firsthand.

How can you find a foreclosure? Don't count on sites such as Zillow. Miss one monthly payment and homebuyers may think your house is up for sale, even though it's not.

HUD homes typically include that information in the MLS listing. For bank-owned houses, look for a small sticker, typically on the front door, that's from the property preservation company.

"If you have a sharp eye, you'll see those in neighborhoods and that means the home probably will be coming to foreclosure soon," said Williams.

Williams says there's even room to negotiate with foreclosures and HUD homes as long as the offer is reasonable.

Know that lenders will not make any improvements from a home inspection, but the savings on the selling price often justifies the repairs. If you're not satisfied with what needs to be fixed, you can get out of the contract.

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