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How to find foreclosed homes for free | Home sale websites | Government-owned foreclosures | Bank-owned homes | Auctions | Driving for dollars | FAQ
Buying a foreclosure is one of the most affordable ways to become a homeowner. Many foreclosed homes sell at a deep discount, because they sell “as is” without contingencies and negotiations.
The number of foreclosures has spiked 153% since the beginning of 2022. There could be some massive opportunities in your area to buy a good home at a bargain, if you know where to look.
If you’re on the hunt for a foreclosed home, we recommend working with a local realtor. A full-service agent can help you find foreclosures, sometimes before they hit the MLS. Our friends at Clever Real Estate can connect you with their network of top real estate agents in your area — and save you money!
How to find foreclosed homes for free
Find a good real estate agent
Local real estate agents are experts in finding foreclosures without paying a fee. And you can find an agent who has previous experience buying foreclosures.
Real estate agents are often tuned into their local markets. They can point you to areas where foreclosures are happening. They can also network with other realtors, banks, and lenders to know about foreclosures before they’re listed publicly for sale.
>> Related: How to Choose a Realtor: Expert Secrets
You also won’t pay agent commissions to an agent. The seller (usually a bank or lender) will be responsible for that payment, which can save you money. Many foreclosure websites, like Foreclosure.com and RealtyTrac, charge a subscription fee.
Check home sale websites
You can search for foreclosures and pre-foreclosures for free on most real estate websites, including:
- Zillow: Select “Buy” from the top menu on the site. Then select “Foreclosures.” It might be more productive to search your entire state for foreclosures (rather than your area code), as Zillow’s foreclosure inventory can be low.
- Realtor.com: Enter your zip code to search on Realtor’s custom page.
- Trulia: Enter your zip code, city, or state, then click “More.” Under “Type of Listing,” you’ll see foreclosures.
Search for government-owned foreclosures
Government-sponsored lending institutions, such as Fannie Mae and Freddie Mac, sell homes they’ve repossessed. You can find these real estate–owned (REO) properties on each agency’s webpage:
- Fannie Mae (HomePath)
- Freddie Mac (HomeSteps)
- The U.S. Department of Housing and Urban Development (HUD)
- The USDA
- The FDIC
- U.S. Department of the Treasury
- The IRS
When you buy a home from a government agency, your agent will work directly with the REO seller agent. The home will come “as is,” and the agency will not be responsible for any repairs you inherit.
Look for bank-owned homes
When borrowers don’t make mortgage payments, banks and non-government lenders seize the home and sell it.
Sometimes banks sell these properties in public auctions. Other times banks list the REO properties on their website and sell them directly to the public. For example, Wells Fargo, BMO Harris, and Bank of America all have online inventories that you can browse.
Read your local newspaper
If a bank initiates a foreclosure, they are legally required to publish a “notice of sale” in a local newspaper once a day for several weeks. You can find these foreclosures in the legal notices section of a newspaper.
Research public auctions
Banks and lenders often try to auction off homes before they list them. These auctions can take place at auction houses, courthouses, convention centers, and even the property itself. There are also online public auctions on sites like Auction.com.
Auctions can be great places to find great homes at a bargain. But they pose serious risks, too. You typically can’t tour foreclosed homes before an auction. So you’ll likely be bidding on the home without enough information. You’ll have to pay a large amount in cash and put down a hefty earnest deposit. There’s also stiff competition from seasoned auctioneers.
If you want to buy foreclosures at an auction, try watching first. Auctions can move fast, and it can help to experience one firsthand before bidding.
Driving for dollars
“Driving for dollars” is a term for a real estate tactic — driving around to look for distressed or vacant properties that could be on the brink of foreclosure.
At its best, driving for dollars can help you find you off-market properties for a discounted price. At its worst, it involves a large amount of time, driving around and tracking down the owners of homes you found.
Lots of apps (like DealMachine and PropStream) can help you find distressed and foreclosed properties near you without the driving. They also let you send texts or letters with a custom offer.
How to find the best foreclosure deals
- Get a comparative market analysis (CMA). A CMA will give you an estimate of a home’s market value, which will help you make a competitive offer. Your agent should be able to supply you with a CMA.
- Conduct a title search and inspection (if you can). Although foreclosures are almost always listed as is, sometimes you can order an inspection and a title search. This could save you from buying a home with expensive problems.
- Tour the home (if possible). Most lenders and banks will let you look at REO properties in person. But this probably won’t be possible with auctioned homes.
FAQ
How do I find a list of foreclosed homes in my area?
You can find foreclosed homes in your area by checking popular real estate sites, such as Zillow and Reatlor.com. Many government agencies, banks, and lenders will also post foreclosed homes on their sites. Your real estate agent can be a great source, too, because they know the local market and can help you find a foreclosure that fits you.
Is it safe to buy a foreclosed property?
It’s not always safe to buy a foreclosed property. It can get you a great deal, but it can also be risky. Many foreclosed homes are in poor condition and need extensive repairs or renovations. Research foreclosure and the foreclosed property before buying. You don’t want a house with expensive problems. A good real estate agent can help you in your search.
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