Investors with an interest in bidding at the auction will likely want to know what is the process to buy a foreclosure. They will have questions such as “how long does it take to buy a foreclosure”, or “can anyone buy a foreclosure”. For those who are new to the auction, and foreclosures in general, the question of why buy a foreclosure may be relevant as well. These are just a few of the key components to understanding what is the process to buy a foreclosure.
In regards to the time and how long does it take to buy a foreclosure, it depends on the situation and the type of foreclosed property. For example, if Real Estate Kate wins the bid and buys a foreclosure property from the county auction, she buys it within a day. A 5% deposit of the property’s purchase price is required the same day and then the remaining balance is due the next day. Then 8-10 days later, the closing title (CT) is recorded. The closing title is considered the final step in the purchase process. This validates the property has been transferred to the new owner.
On the contrary, if Real Estate Kate purchases a foreclosure property from an online auction, such as Hubzu or Auction.com, the process can take much longer. At minimum the closing will take place within 2-3 weeks. Sometimes if there is an issue, specifically with the title, it can take up to a month or more. Examples of how this process can be slowed is if multiple Seller signatures are needed, the property was involved in a cross-collateralization loan, or there are heavy fines, liens, or mortgage payoffs needed. As you can see, there are quite a few aspects that can affect the timeframe of a foreclosure, and therefore there is not a simple answer to “how long does it take to buy a foreclosure”.
To answer, “can anyone buy a foreclosure”, technically yes, anyone can buy a foreclosure as long as they are 18+. However, there are a few steps one must go through buy a foreclosure. Firstly, the Buyer must have the necessary capital available. This is typically in the form of liquid cash. If one is buying from the court steps, at the county auction, it must be liquid cash. In other cases, such as online auctions, a FHA 203k Improvement Loan can be used. Though, these types of loans can usually be a pain and have a tendency to fall through.
Aside from understanding what is the process to buy a foreclosure, another equally as important component is why buy a foreclosure. There is a reason why many investors are interested in understanding the foreclosure process of where to find the deals and how to buy the houses. That is because with a foreclosure, you typically get the best bang for your buck. For example, imagine trying to flip a house that is retail and listed on the MLS. Although you can see the vision (knocking down this wall, adding a door here, etc.), the Seller has already added their personal finishes and expects to get top dollar. The numbers just do not work out for each party.
To delve deeper and learn more about real estate foreclosures for sale, check out “Real Estate Foreclosures For Sale: Finding the Deal”.