A Foreclosure is a property in which the bank or lender has taken back their security, the property, since the Borrower who had a mortgage on the property did not continue to make their monthly payment for a certain amount of time.  In a Foreclosure, the Bank has taken back the property and cleared the title of any mortgage liens and most other liens in order to resell the property and get back most of the Banks investment in the property.  It is typical that the bank will take much less than what was owed on the property, and most foreclosures sell substantially below market value.  Since a foreclosed property has a clear title, it is easier to close quickly.  These are the upsides.

The downside is that when you pursue and purchase a bank foreclosure, you are buying the property in “As Is” condition with no knowledge of the property being brought to you from the previous owner who may have lived there.  No “Property Condition Disclosure”, nothing.  You do not know if the house had a fire or a flood at one time, and you have no one to ask about these and many other items.  You are solely relying on a Professional Home Inspection to inform you of the total condition of the property.   Often foreclosure properties are in poor condition and usually need thousands of dollars in repairs and improvements.

Due to the poor condition of many foreclosed properties, many Banks and Lenders will not lend on a foreclosure that is in poor condition.  Banks and Lenders will not allow you to perform repairs and improvements to a foreclosed property until you have paid for the property and the title has been changed over to your name. If you decide to pursue and purchase a Foreclosure property, be prepared to pay cash, or to have a Bank or Lender behind you who has loaned on foreclosed properties before.  You should also have additional money to make repairs and improve the property above and beyond your loan money.

Banks and Lender usually have an inventory of houses that they have foreclosed on.  In addition you can also check with FNMA and the Department of HUD for these types of properties as well.  In Middle Tennessee, HUD houses, FNMA foreclosures, Short Sales and most Foreclosure houses are listed right in the MLS system where all Realtors can find them.  Sometimes they are labeled on the top of the MLS form, other times there are key words and descriptions written into the “Remarks” section or the “Realtor Remarks” section of the MLS pages, and other times you have to dig deeper in order to find these properties.

I have sold all of these types of homes, Foreclosures, HUD homes, Short Sales, and I have the experience and the knowledge to know how and here to find them if this is a direction that you may choose to pursue.