How to Find Foreclosed Homes

by | Mar 25, 2021 | Buying

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Considering buying a foreclosure but don’t really know how to find foreclosed homes? For home buyers, foreclosure homes can be great investment properties. But finding foreclosure properties poses challenges. And difficulties can change depending on what market you’re searching. Additionally, to buy a foreclosed home, you’ll need to be willing to put in extra work on the property. And you’ll need the capital to do so.  

What is a foreclosure?

Most homeowners borrow money from a mortgage lender to purchase their homes. When a homeowner fails to pay their monthly payments, a lender may seize the property from the owner. And then they’ll sell it to another buyer to help recover the mortgage balance. This is the basic definition of a foreclosed home.

How do you find foreclosures?

Talk to foreclosure real estate agents

Sometimes it makes sense to hire a real estate professional that specializes in finding foreclosed homes. Their main specialty is their ability find foreclosures more easily than other agents. This is due to their experience with local real estate. And while any real estate agent should be able to point you in the right direction, it’s always best to work with an expert. 

Free foreclosure websites

  • Equator.com –  Offers free listings of homes in foreclosure alongside short sales, open-market listings, and properties available.
  • HomePath.com – Owned by the Federal National Mortgage Association (Fannie Mae), HomePath offers free listings of thousands of homes in foreclosure being sold by Fannie Mae. 
  • HomeSteps.com – Owned by Federal Home Loan Mortgage Corporation (Freddie Mac). It lists homes in foreclosure that Freddie Mac is selling to investors or potential home buyers.
  • Zillow Foreclosure Center – The popular website used by home sellers and buyers alike has its own search site for foreclosure listings. 
  • Realtor.com Foreclosures – You can focus your search using a zip code and/or city. And you can also check with local real estate companies and their agents directly to search for foreclosed homes.

Paid foreclosure websites

In addition to the methods to finding foreclosed homes listed above, there are sites that claim to do all that hard work for you. But obviously for a fee. Be careful when subscribing to these sites. And do your due diligence to make sure these sites are a good fit for your foreclosure search. Sometimes the sites pull in faulty data or are slow to update.

  • RealtyTrac – This is a subscription website that gets you access to loan history, auction dates and foreclosure addresses.
  • Auction.com – This website is an online marketplace where you can make offers on foreclosures directly to the sellers. 
  • Foreclosure.com – Again, this one is another option if you are looking for a search tool, however, they claim to update their database twice a day whereas some of the other sites only update once a week. This would help you get access to deals faster.

Bank websites

Sometimes larger banks list their inventory of foreclosed properties on their websites. The foreclosures listed on these sites are searchable by state and city. They’ll include details about their prices, photos, and sometimes descriptions. Your real estate agent should be able to help you search bank websites for a list of foreclosures.

Additionally, some  lenders hire asset management companies to handle their foreclosure listings, so it’s worthwhile to check those websites as well. Two examples of these companies are Premiere Asset Services and Keystone Asset Management.

Government agencies

Below is a list of government agencies that might be useful when finding foreclosed homes. Keep in mind that some of these agencies require you to have a real estate license. Or sometimes you may need a broker license in order to access their data.

  • HUD Homes: This site includes a list of foreclosed properties that belong to the U.S. Department of Housing and Urban Development. 
  • Fannie Mae – Owned Property Search: On this site, you can search for properties that have been foreclosed by Fannie Mae, which is a government established housing corporation.
  • HomeSales.gov: These homes are previously owned and are for sale by public auction or other method depending on the property. Anyone can buy a home for sale by the U.S. Government. However, you must work with a licensed real estate agent or broker to put in an offer that will be accepted.
  • The Department of the Treasury / IRS / Customs: Under authority of the Internal Revenue Code, the property described here has been seized or acquired for nonpayment of internal revenue taxes and will be sold.

Public records

The foreclosure process is long and tedious so it’s necessary that lending companies have numerous legal notices that must be filed with your County Recorder’s Office. The information is public record and available to anyone that needs it. If you visit your county’s office or their website, you can search for records pertaining to Notice of Default, lis pendens (an official notice to the public that a lawsuit involving a claim on a property has been filed) or Notice of Sale. The best part about searching public records is that it’s free and you might find newer properties that haven’t reached online foreclosure websites.

What should you look for when looking at foreclosure listings?

Finding a foreclosure can be a daunting task, so here are some simple steps to ensure you are getting the most bang for your buck:

Touring

As with any real estate transaction, make sure that you take a moment to tour the property as foreclosures can typically be especially distressed. Be sure to pay close attention to detail because all repairs will be up to you. The bank will not be paying for any of the repairs that you may need. Additionally, the bank isn’t required to give you disclosure documents like you would receive from an individual owner in a traditional transaction.

Prices

Banks set competitive prices so that they can move their foreclosed inventory. With that said, there is a good chance that there will be multiple offers on the property you are interested in so be prepared to navigate a bidding war. The average foreclosure sees more than ten offers so don’t try and low ball your offer. If the property has been on the market for more than thirty days, you might be able to consider negotiating to get a better deal on the foreclosure.

Other things to consider

You’ll need to remember that most issues that might arise in an inspection are more than likely going to be a cost that you’ll need to absorb. Below are some items that are usually paid for by the home-owner in a standard transaction, but not when buying a foreclosure from a bank. 

  • Overdue utility bills
  • Unpaid HomeOwners Association dues
  • Septic inspections
  • Re-keying the locks and ordering new garage door openers
  • Torn out cabinets
  • Holes in the wall
  • Plumbing issues

If you are interested in learning more about purchasing a foreclosed home, reach out to an experienced agent. Trelora has handled thousands of transactions across the US, including many foreclosures, and our agents are available to answer your questions. Plus, Trelora’s low fees help you save on transaction costs so you can keep more money available to invest in your new home’s upkeep.

Christopher has been been in the Real Estate industry for 8 years and has had the opportunity to close over 1,000 deals while acting as the Managing Broker for thousands more. Christopher is passionate about continuing to find ways to simplify, maximize, and serve Trelora’s clients exceptionally well and spends his time building teams to deliver high levels of service. When not doing real estate Christopher can be seen training for marathons and ultra relays with his 2 year old daughter, eating pizza, and drinking a steady stream of Diet Coke.

Thinking About Buying Or Selling A Home?

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Thinking about buying or selling a home?

Get the best real estate advice from local experts in your inbox.