Buying a foreclosure can be a great deal but you better talk to an attorney and educate yourself about the process.
I know a little bit. Basically you better make sure the title is clean. Also, many times the owner won't leave and you have to take legal action to get them out. Cash for keys is a program that people are doing where you pay the occupant to get out. Usually 3k. LOL.
If the person being foreclosed on is still living there it can make things really difficult. You can't get into the home or even on the property if they don't want to let you in. At an auction where the people are still in the house you have to stay on the sidewalk. They could trash the place and/or take out anything they can ie: toilets, pluming, light fixtures, etc. This also means you can't have a professional do an inspection until you win the auction and have invested your 5k deposit and the occupants have left. You won't be able to get a loan until that inspection is done. What that means is if you win the auction you have 30 or 60 days to come up with financing and if the place is a hell hole you won't get a good inspection and you'll not get your loan. That means you'll lose your deposit which is 5k unless you can pay cash for the property.
The timing could get close. If you win the auction the people may not leave. The legal process to get them out could take a month. You only have a certain amount of time to get your financing after you've made your deposit. So if you have to get the occupants out, get the place inspected and fixed if needed, while also working against a timeline to get your loan, things could get real tight in terms of timing. There may be extensions but I'm not sure. If you can't get your financing in time you lose your deposit which is usually 5k.
People who are being foreclosed on are often so pissed off about it that you could also face retaliation. They'll drive by and see who bought their home and who knows what they'll do.
If you go to an auction, you bring a bank check made out to yourself and then you sign it over if you win house. That's your deposit.
There will be a starting bid by the bank and the bank may end up buying the place if they don't get what they want in terms of a price.
Personally I would be worried about the retaliation part if some psycho is so pissed that he/she may try to mess with you.
There are definitely other caveats that I haven't mentioned. As with any financial transaction, do you homework!
It's no piece of cake and not a sure thing by any means. IMO only people with deep pockets and lots of real estate experience should get involved with foreclosures because a lot can go wrong. I was thinking of it myself but I feel I may be better off just doing a normal purchase, at a good value, that has full transparency.
I'm no expert so some of the things I mentioned may not be exact and situations and laws can differ from area to area. Just keep in mind that in the business world "free lunches" are rare.
