Homes & Land For Sale Alabama Gulf Coast
Aleta Boudreaux

Buying Forclosures

Buying a foreclosure is not easy. You may get a fantastic price, but it takes a lot of time to find just the right property. Most foreclosures are real estate owned (REO) properties. They are owned by the lender, usually a bank, HUD or Fannie Mae as a result of the previous owners default on the loan.

Common ways to purchase a foreclosure is through a public in-person auction or an online auction, like  or directly from HUD at If you have never purchased a home before it is a good idea to have a real estate agent that is experienced with foreclosures to guide you through the process. They can assist you in making the offer, negotiating the purchase price and terms of a foreclosed home. With HUD homes you will need an agent that is registered with HUD to make the offer online.

A public foreclosure auction can occur when ownership of the property officially goes back to the bank.  You would need to be at the public auction to purchase the home, on the steps of the County Court house. You will need proof of funds as they do not wait for loans to be approved.

If the house goes back to the lender, it will typically be listed with a Realtor©.  When the sign goes up on the property and you can purchase the property through your real estate agent.

Online auctions are tricky and not for the novice. Often homes are listed at a very low introductory bid price in order to pull the buyer into the bidding process. Most times there are fees that the buyer must pay above the purchase price. So if you are investigating an online auction, read the fine print. A large earnest money deposit by credit card is often required before you can start bidding. These auctions happen fast and you may not have time to inspect the property, or it may still be occupied. You may have to rely on photos and printed descriptions.  Do your research and set a budget before you attempt an auction. Whether it is online or in person, if you win the bid, the seller expects to close on the house quickly.

Other things you should know is that foreclosures homes are sold “AS IS”. It’s going to be up to you, the buyer, to pay for any inspections and turning on the utilities. Banks want to sell these properties quickly. You will need a pre-qualified letter from a lender or proof of funds from your bank that you have the cash to purchase the home before a seller will accept an offer. Getting pre-qualified will also let you know how much home you can comfortably afford.

Because the property is a foreclosure it is up to the buyer to determine the property’s condition. The seller will have no first-hand knowledge of the condition of the property. Once your offer is accepted you can ask for an inspection period to have the home inspected home inspector who will make a list of everything good and bad and make suggestions on items that need to be fixed. Then you can research the costs with a licensed contractor, and factor in those costs to any offer you make to ensure you could cover the costs on top of your new mortgage payment.

You will also have other pre-purchase expenses which may include an appraisal and earnest money or ‘good faith’ deposited with your real estate agent to demonstrate your sincere interest in purchasing the home. As with a typical real estate transaction, out-of-pocket expenses can occur before and after an offer to purchase a property has been submitted. These out-of-pocket expenses may include lender required documentation such as an appraisal or home inspection and bank-required minimum earnest money.

A good mortgage lender will tell you about all the loan products available for this type of transaction, including traditional loan products or an FHA 203(k) Renovation Loan. This is a mortgage that provides the purchase price plus funds for renovation by financing the “as improved” value of the home.

Most foreclosed homes are listed for sale with real estate agents the same way as traditional homes. However, in addition to searching through REALTOR.COM or ZILLOW.COM, or you can do an online searches for “REO properties” or “foreclosures”.

Always request a title for any real estate transaction. A title company will check the property for liens (outstanding debts someone is attempting to collect against the property) as well as verify that the deed to the home is correct. In Alabama there is still a previous owner’s right of redemption, meaning that with payment to the lender, they can reclaim their home within a certain time.

You are the only one that can decide if buying a foreclosed home is a good match for you. Do your research and work with qualified professionals to help you make the right decision.

At Azalea Real Estate in Grand Bay we can help you from search to closing. Visit www.grandbayhomesandland to preview homes or contact Aleta Boudreaux REALTOR© at 251-656-4576 for more information on purchasing or selling your home in South Mobile County. Meet Aleta on FaceBook at

©Aleta Boudreaux, 2018

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