Are foreclosure properties a good primary residence? Help please?

Question

Hi BP Nation! I'm Amalio Lopez and I'm 23 years old. I am currently looking into buying a foreclosureproperty in the SoCal region as my primary residence. Specifically the Riverside County. I was wondering how the buying process works and where to search for foreclosured homes. Any advice would be great appreciated thank you!

Joel Calkins · Answer

Hey Amalio, Great question!

Being new in the REO game can be tricky so it's good to do plenty of due diligence before stepping up to the courthouse steps. First of all, foreclosures are a great way to get a good deal in hot markets (If done right). If you're interested in buying one I recommend going to the physical location to make sure the property is still standing. Kick the tires and maybe ask neighbors about the history of the house and its residents. It's important to understand that many times a person who is getting foreclosed has no incentive to take care of their property and this can be a nightmare when you first step in the door.

How the buying process works:

1. In an auction setting most times, you won't be the only one there. Most auctions only take cash (cashier's check, cash, or money order) IN FULL but if there is an option for a mortgage then get your pre-approval done early.

2. Have a set limit you are willing to pay for the property. A good rule of thumb is to pay 70% of the property fair market value.

3. Once you get an auction bidding card if you successfully win the property payment is usually due immediately. After you pay for the property you can expect a certificate of sales or some sort of receipt.

4. Wait for the transfer of title. Its important to not do any work on the property before you receive the title, this is because the owner can file an objection and pay the amount owed in full.

It can be intimidating and difficult but also an amazing way to procure a good deal. There are plenty of websites that list foreclosures as well as pre-foreclosures.

I hope this helped. Good luck with your search!