How to Find and Buy a Foreclosed Home

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foreclosures can be one of the best ways

to get an incredible deal on a piece of

real estate whether you plan to live in

that property yourself or you plan to

use it for an investment property for

example this is a foreclosure that I

bought and so is this one and this one

and they're all awesome real estate

deals but the world of buying foreclosed

properties can get a little complicated

it's filled with legal jargon and

insider we'll call them

secrets well my name is Brandon Turner

the author of the book on rental

property investing and the host of the

top real estate podcast unearth the

BiggerPockets podcast and in this video

I want to walk you through the process

you need to find and purchase foreclosed

properties and hey if you liked this

video and you want to see more like it

be sure to click that little thumbs up

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Channel all right let's get on with it

now I'm gonna divide or divide this

video into three large chunks or

sections first we're gonna get on the

same page about water foreclosure is and

isn't including the kind of the three

different phases in which you could buy

a foreclosure and second I'm gonna go

and talk about the four different ways

to find for different strategies for

finding foreclosures and then I'm gonna

walk you through the process of making

an offer and making sure you end up with

a killer good deal now before diving too

deep into the details of how to buy it

let's get all on the same page with the

same terms all right a foreclosure is

the process where the lien holder takes

ownership of a property due to a variety

of possible reasons but usually it's the

lack of payment right you don't pay your

bills you get foreclosed on the

foreclosure process differs with every

state but it generally begins with a

bunch of notices are given to the

property owner and then a legal set of

steps leading up to actual foreclosure

or carried out now there's generally

three phases in the foreclosure process

where it's possible to buy a property

there's the pre foreclosure there's at

the courthouse steps at the foreclosure

and then after foreclosure so when

learning how to buy foreclosure it's

important to know what the three phases

are so let me define each first there's

the pre foreclosure phase now it is

possible to buy a home before the

foreclosure actually happens and the

homeowner and before they're kicked out

now buying a property dualist period is

known as the

pre-foreclosure and it's a common

technique used by a lot of real estate

investors and it can be a good way to

find motivated sellers after all few

things in life are more motivating for a

homeowner than knowing they're soon

going to be physically removed from

their property next there is the actual

foreclosure at the courthouse steps you

see in most state states once the legal

process has been carried out and the

property is sent to the county for a

public auction it's done on the

courthouse steps like sometimes

figuratively sometimes actual literally

on the steps and it's sold to the

highest bidder this process is known as

the trustee sale the bidding generally

opens with an automatic starting bid of

whatever amount is owed on the property

so no you're not gonna show up in a bid

$1 on a property in and get it so

whatever they owed on it is where the

bid begins at for example if a home

owner oh to $80,000 on a loan and the

loans secured the property the bidding

would start at 80,000 if no one bids any

higher the lien holder will be awarded

the property and be given the title so

if nobody bids higher than 80 the bank's

gonna take that back at 80 a couple of

years ago I went to a courthouse steps

auction and ended up winning this guy

for just a buck over the opening bid was

around fifteen thousand bucks because

listen no one else showed up to the

auction that was a good day all right

now if you plan to buy a foreclosure at

the courthouse steps here's a few tips

to keep in mind when you buy on the

courthouse steps there may be liens

attached also you probably won't be able

to see the inside of the property

beforehand and the court usually

requires all cash on the day you buy it

so you can kind of rule out getting a

loan on it you know this makes buying

properties on the courthouse steps a

more advanced and maybe risky strategy

that I usually don't recommend for

beginners but hey it works alright so we

covered the pre foreclosure and the

actual foreclosure on the courthouse

steps the third and really honestly

probably the most common phase that most

people talk about when they talk about

they bought a foreclosure that is the

actual post foreclosure phase is the

after the sale on the courthouse steps

the new owner of the property probably

the bank who lent on it unless somebody

bids higher you know they're gonna have

to evict the tenant probably the former

homeowner who might still reside there

now if it's a bank the bank will

generally go through the process

the victim the tenant get the home

listed with a real estate agent to sell

it the remainder of this article I'm

gonna focus on how to buy foreclosure in

this phase the post foreclosure after

it's been filtered through the

foreclosure process and is now available

for sale publicly now when a bank takes

back the property and begins to sell it

the property is known as an REO or a

real estate owned property now it's this

type of real estate deal the REO

properties that I want to spend a lot of

time on because that's what most people

talk about when they're saying

foreclosure specifically let's talk

about how to actually find these as well

the most common source of finding

foreclosures is through the Multiple

Listing Service the MLS now the MLS is a

collection of lists put together by

local real estate agents of all the

properties for sale

in their office now in the old days

these lists were actually kept in file

cabinets and each office faxed them to

each other and made a big list right but

today we've got all the internet they

got the internet so it's all kept there

the MLS is fully accessible for any real

estate agent so if you're not an agent

you should need to either get an agent

or you should become an agent right so

the good thing is the real estate agent

is typically paid for by the seller so

it's free for you right because if

you're buying it doesn't cost any money

however you don't have to just rely on

real estate agents to tell you what

properties are listed you can actually

get a lot of information online through

a lot of different real estate portals

like realtor.com red fin comm Zillow

comm or Trulia com these sites will help

you sift through nearly all the listings

and give you at least some of the

information about the property keep in

mind however these lists can also be

slightly delayed or outdated so in a hot

market you could miss out on some deals

if you're only relying on these real

estate portals all right second you can

buy re o--'s directly from a banks REO

department banks typically have an REO

department somebody that is in charge of

working through those properties now I

said earlier most REO is actually end up

on the MLS but it is possible to make

connections with an REO department at a

bank and have access to properties

before they put on the MLS this is

especially true with smaller community

banks and larger commercial properties

alright third the HUD store you know

some properties have been foreclosed on

by the US housing of US Department of

Housing and Urban Development which is

HUD right

if you get a HUD loan and you get

foreclosed on a lot of times they're put

on the MLS but a lot of times they're

just privately listed on the HUD website

at HUD home store com so be sure to

check that out as well now the fourth

way to find foreclosures foreclosure com

so if we're closure dot-com is a website

that you can find low price to stress to

foreclosures like bank owned homes

government foreclosures like Fannie Mae

Freddie Mac HUD there's pre foreclosures

on there there's REO properties and

foreclosure auctions among other things

so foreclosure calm curates them all

through a membership on their site so if

you're interested in that BiggerPockets

actually has a partnership with them and

we can give our viewers a 7-day free

trial just go to BiggerPockets

dot foreclosure com to start searching

and check it out all right so now you

have some tangible steps on where to

find foreclosures the rest of this video

is gonna go into some more detail on how

to actually buy one of these properties

and make sure you get a great deal so

let's talk about putting in your offer

once you find a property you want to buy

it's time to submit your offer again

this is what a good real estate agent

comes in really handy typically you're

gonna meet with your agent tell them

like let them know the terms you want to

offer how much when are you gonna close

how you gonna finance it your agent will

submit an offer to the seller and

they'll look it over and then they got a

few possibilities first they can accept

it woo I could deny it oh they can

ignore you if it's too low

in other words denying or most common

they could counter you they tell you now

not that but how about this and many

times if there's a lot of offers on a

property the sellers gonna ask you to

submit your highest and best offer in

other words they're saying alright you

know there's a lot of bidding here let's

let's see what you got you know give us

the most you can do now it's easy to

fall into action mode and overpay when

that happens because you allow the

emotion to catch up with you but you

know stick to the numbers keep the

emotion out of it you know that really

brings up a really really important

point here just because something is a

foreclosure does not mean it's a good

deal in fact most of them are not so

it's vital you learn how to analyze a

real estate deal and know exactly how

much you should pay for a property if

you want some help with that be sure to

check out the BiggerPockets

analysis calculators you can analyze a

real estate deal flip rental wholesale

bur in under five minutes and even if

you're brand new to this you can learn a

ton so definitely check it out bigger

pockets that column slash analysis

all right moving on so let's say your

offer gets accepted well now it's time

to do your due diligence and make sure

all your Ducks are in a row this is a

time where you hire an inspector to

check out the property use your

financing fully in place and in most

states the closing process is handled by

a title company who's gonna prepare all

the documents make sure the title is

correct and arrange for the signing of

all the parties however in some states

an attorney is responsible for that your

agent is going to know whether you're an

attorney or a title company state all

right after both parties have signed the

document and the new deed has been

recorded with the local county the

property is now officially yours it's no

longer foreclosure it's your property

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