Buying a foreclosure can be both a nerve-wracking and exciting time. Although it is a sad time for the people who must sell their home, or who have already lost their home, as a buyer in this downturned market you have the opportunity to pick up a true bargain property. In some cases homes are now selling for half of what they were valued at just one year ago. Once the market picks up again (as it always does) your cut price house will increase in value back to where it should be at. You will then be very happy that you had the foresight and courage to buy a foreclosed home.

The first step is to find a property that you are interested in. You can do this via pre-foreclosure notices or lis pendens, or bank or government owned for repossessions (REOs) or finally, at auction for Sheriff’s Sales or Trustee Sales. Each of these three methods of finding foreclosures can lead to you picking up a bargain.

The next step is to organize financing. Work out what you can afford and approach a foreclosing lender.

After this is done, contacting an agent is what you must do. Although this step is not mandatory, it is useful for newcomers in particular. Agents with experience in foreclosures are best.

Then you need to contact the owner – this can be the seller or the lender in charge of the foreclosure such as a bank or government.

Now you are ready to make an offer. A real estate agent can assist you in this step. Make sure you always find out the approximate market value of the property beforehand. Because buyers are generally desperate in this situation, your offer needs to be appealing and offer them just enough to ensure them that they will be out of financial trouble.

Once you have decided that buying a foreclosure is the right step to take, start looking for properties that are within your budget. Never be afraid to look at homes that are priced well above your maximum spend as in some cases the price will drop significantly.

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