Some auctioned and foreclosed homes are listed on the multiple listing service, that your Real Estate Agent has access to
Other homes are listed online. A quick Google search (“Illinois Foreclosed Homes/Auction Homes”) will do.
The absolute best route to take is to work with an experienced real estate agent that specializes in foreclosure home sales. This is not just because they will have better access to available listings, but also because foreclosure transactions are very different from conventional real estate sales. You will want someone that can guide you through all of the twists and turns.
Specialized agents will have a network of contacts from traditional lending institutions, mortgage banks, other real estate agents, and residents living in areas where you hope to buy. Very often real estate agents work directly with banks to handle REO properties.
Foreclosure sale ads from the VA and the FHA are posted in newspapers on a regular schedule. Legal notices of default also run in newspapers.
You can also check online public records and the county courthouse. This is where all real estate transactions for a property in that county are recorded.
The most important thing to understand about closing on a foreclosure is that it’s a non-standard transaction and the lender will have their own processes and requirements. This is primarily a protective measure to shield the bank from any recourse by the buyer.
1. Have a preapproval – a loan where you can finance in repairs would be great.
2. Get a professional inspection and a contractor wouldn’t hurt either. I usually do this before an offer is submitted because some REOs won’t allow for contingencies.
3. Run a title search and report. You won’t have to worry about this with VA, FHA, USDA, Fannie/Freddie Mac; but other REOs you will. If you are not paying cash, you will not be able to close unless this is done anyway.
Keep in mind there will be no seller disclosure requirements because nobody from the bank has ever lived there.
Ultimately, buying a foreclosure is a complex process that can result in a true bargain when done right or a terrible decision when done carelessly. Even professional investors can end up upside down on these transactions; I know this from experience!
If you’re ready to take the plunge, do your research, speak with a professional, set a budget, prepare, and take it one step at a time.