Postforeclosure purchases are easier to make than preforeclosure or auction purchases, but there is more competition for the properties.
Start by identifying your urgency and the importance of the various features you want. If you desire to purchase a home as soon as possible because you have young children, you will be fairly rigid in your property requirements and may have to pay a higher price as a result.
HUD and other government agencies often give prospective homeowners the first opportunities to buy properties. After a certain time period expires, however, anyone can buy. After that point, homeowners will be competing against investors, not just other homeowners.
People looking for flip opportunities can take more time, but they still need to have fairly specific needs in a property profile. Investors looking for rental properties can be very flexible about location and features, as long as the dollars work out. They can afford to shop whatever bargains are available, which are usually the properties that are many months past the foreclosure event.
The following are the most popular strategies for meeting such goals.
• Identify several sources of postforeclosure property sales information, such as websites and local real estate brokers. Follow all local foreclosures for awhile, keeping track of how long they are on the market and how the ultimate sales prices compare to the beginning asking prices. This gives you a good feel for timing and lender flexibility.
• Follow a few foreclosure auctions in which the property is bid on by the lender. How long does it take that property to show up on a website or with a local broker? That will give you a feel for the head start you might enjoy if you can contact lenders right after foreclosures instead of waiting for public sale information. Sometimes, lenders will tell you that once they foreclose, they can do nothing until all the internal paperwork is completed and the property is turned over to a broker. It is good to identify which companies have that policy.
• Focus on any specialized programs for which you might be eligible, such as the HUD Good Neighbor Next Door program.