To begin with, take the time to decide which type of bank-owned property is right for you. In some areas, foreclosed properties are sold at auction and are advertised by the local court or sheriff's department. These homes are easy to find and are often listed in the newspaper or local public records. Buying a property at auction is the best way to score a serious discount but can also be particularly challenging for new or inexperienced buyers.
Property auctions are often dominated by professional buyers and investors, who can put up stiff competition when it comes to bidding on real estate. Another drawback to auction listings is that they generally require the winning bidder to pay cash for the property. This means that buyers are unable to rely on traditional mortgages and loans, which put these properties out of reach for the average home buyer.
If you can't afford to pay cash for your property, or you want to avoid the challenges of an auction, look for foreclosures owned by banks or other lenders. Known as real estate owned (REO) properties, these homes can be purchased using traditional mortgages and don't require the buyer to participate in an auction bidding war. One of the easiest ways to find REO properties in your area is to simply call local banks and ask about foreclosure listings. Some banks will provide you with lists of homes for sale, while others may direct you to real estate agents who maintain the bank's listings.
Newspaper and Internet ads represent another source for foreclosure listings. Some sites, such as those provided by Fannie Mae and Freddie Mac, provide free listings. Others charge a small fee, but typically offer free trials so you can decide if the site is worth the cost before paying.
The U.S. Department of Housing and Urban Development, or HUD, serves as another great resource for those looking to buy foreclosed properties. All properties listed on the HUD Web site are offered first to buyers who are looking to purchase a home they will occupy themselves. This gives home buyers an advantage over the real estate investors and professional buyers who often make it difficult to purchase houses at auctions.
If you find your foreclosure search has stalled, it may be time to consult a professional real estate agent. Some agents specialize in bank-owned homes and can help you not only track down the perfect property, but also assist you with securing financing and completing all the necessary paperwork.