Different Ways to Buy Foreclosures

Different Ways to Buy Foreclosures – you can buy foreclosures a number of different ways. Below are the 3 most common with some perspective on my experience with 30+ years in the real estate business.

Buying directly from the homeowner – You can purchase foreclosures directly from the homeowner prior to it going to sale and back to the bank to be sold as a “Bank Owned” property. I am not a fan of this option for one simple reason. Homeowners are being taken advantage of and deeding their homes over to crooks who promise to bring their mortgage payments current and never do anything. This is the option that all of the late night infomercials are always talking about. It’s unfortunate that when someone is in a difficult situation that these crooks come out of the woods to steal equity away and convince homeowners to deed the property to them. If they really did what they say they will do then great, but it’s too often I hear horror stories about homeowners that were taken advantage of. What typically happens is a number of different things, including renting out the home to collect rent payments for 6-12 months while never make any single mortgage payment. The end result in many of these scams is that homeowners are sold on the idea that they will avoid a foreclosure showing up on their credit. If you have equity in your home then you should try to sell it with a local real estate agent. Your lender will give you some time to sell the property if you show them you are making an effort to sell it.

Buying at a real estate auction – not a big fan! These homes that are being sold at auction are homes that didn’t sell via OPTION 3 of this article. They were listed with local real estate agents as “Bank Owned” homes and as a result of them not selling in a timely manner the bank turns them over to an auction company for sale. Would you go purchase a foreclosure amongst hundreds, if not thousands of other buyers when you could have purchased it a month earlier with no other competition?  Auctions are not my favorite, you are in a room with people that do not take the time to research the property and they are sold on this slogan. “Buy this previous valued home of $450,000 with a starting bid of $275,000!!!” I have news for you, take the time and go to one of these auctions and you will see that by the time it actually sells you really aren’t getting a good deal compared to the foreclosures available for sale in the local MLS.

Buying from a local Realtor – my favorite option maybe because I am a Realtor! 🙂 No, it’s because it makes the most sense. You find a local real estate agent who specializes in selling bank owned real estate. I would recommend that you do a Google search for “bank owned real estate for sale CITY NAME” and you should come up with some options. Buying from a local real estate company will allow you time to do your inspections on the home you are buying; you will get a clear title with title insurance. If you purchase your home listed with a real estate company that is “Bank Owned” you do not have to worry about the title history because you will be provided with a title insurance policy when you close escrow. You will have typically a 30 day escrow which will allow you to purchase with financing.

Other things to understand about buying foreclosures – One big misconception is that you deal directly with the bank. Let me tell you that it doesn’t happen. Banks don’t sell real estate. They find local real estate agents who know the local market and pay them a commission to get the property sold. Don’t waste your time trying to work out a great deal directly with the bank or insist that your low offer at 50% of the listing price should be considered. Banks want to sell these foreclosures but they are not stupid.

Things to do after you purchase a foreclosure property – Get the locks changed as quickly as possible, many banks use the same key cut for all of their listings because they have so many vendors to deal with they have the locksmith re-key all of their foreclosures with the same cut key. You should really invest $100 to have your new home re-keyed.

If you would like any San Diego Foreclosure Information please feel free to contact us.

12 thoughts on “Different Ways to Buy Foreclosures”

  1. If anyone has any questions about buying foreclosures please feel free to ask me a question. You can always email or call if you would like also. We sell a lot of foreclosures in San Diego County. If you are looking to purchase foreclosures outside of San Diego County please ask me if you need assistance finding an agent in that area. This is the time to go out and take advantage of the market. There are deals to be purchased!

  2. San Diego Locksmith

    I can’t tell you how busy I am staying with all of the foreclosures I am re-keying. If there are any real estate agent in San Diego looking for a great locksmith please feel free to call me. 760-599-4003. You can also visit my website at http://www.leadinglocksmith.com to view additional information about my company. Thanks!

  3. I hold a third mortgage on a property that is now being foreclosed on by the first mortgage holder. The first and second total $200,000 and the house is worth $300,000 I think. What strategy would you use now?

  4. If you hold the Third Mortgage then the only way that you can protect your position is to satisfy the 1st & 2nd, which are superior liens to your 3rd.

    If the borrower is not paying your 3rd lien, or even if he is but he is not paying the 1st or 2nd, then you would have the right to file a notice to default and then subsequently a notice of sale, which is the actual foreclosure. The reality is that to perfect your right to foreclose you would have to pay off any liens that are superior to yours, the 1st and 2nd, and this may not make much economic sense unless there is sufficient equity that you would be able to justify paying of the $200k owed to the 1st and 2nd and end up as the owner of the property by virtue of your foreclosure.

    This is a prime example of why someone in a 2nd lien position is always in greater risk then the 1st lien position and someone in 3rd lien position is even in greater risk because the 1st and 2nd are superior.

  5. Explore Hawaii Blog

    I was reading somewhere that offlate trends are that more and more people are inclined to buy foreclosure properties as a result of which there is a boom in this business. I hope this stays !!

  6. Phone service san diego.

    I agree that auctions are not the best way to buy foreclosed homes. If the bank or relator can not sell them then they try to sell it at auction. People wind up paying more than normal alot of times at a auction and do not look over the house before.

    Phone service san diego.’s last blog post..georgia local phone service provider

  7. With a Realtor it is much easier to find listings of foreclosures. When I went looking for homes in South beach and Alton rd I Found the prices to be a little bit expensive in that area. The cheapest I found a home to be was priced at 499,000 IN FORECLOSURE! Read more about my experience with the South Beach Pricing of Foreclosure homes at

    Bryan Dasilva’s last blog post..My Diet.

  8. I agree with you. Most auctions the prices are to high when you see what the homes need to have fixed. People get in frenzy and pay more than they should sometimes. Realtors know what house is a good deal and location so that should be my first choice.

  9. I still beleive we have the best “Free List” of foreclosures and short sales in San Diego County. Feel free to click on the link above to view foreclosures by city or zip code.

    You can also view all foreclosures in Riverside County now. Please check out the home page and click on Riverside Foreclosures.

  10. Team Aguilar @ List of Riverside Foreclosures

    Here is our list of Riverside Foreclosures – Bank Owned Homes (REO’s). I really think this is by far the best list of Riverside Foreclosures. Please check it out when you can.

Comments are closed.

Call Now ButtonCall Now