Foreclosure sales – how do they work?


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When it comes to house hunting, you are bound to come across a foreclosure sale or two. It can be a great way to score a good deal on the home of your dreams, but it’s important to know how the process works.

A foreclosure is a house whose owners were unable to pay the mortgage or sell the property and now the real estate lender has assumed ownership and is trying to sell the property to recoup some of their costs. Many people think foreclosed properties are only going to be in a lower price range, but you’ll find all kinds of homes in a variety of price ranges.

When viewing a foreclosure, you may find that not a lot of previous information about the home is available. When an owner sells a home, they typically fill out a disclosure form that lists any upgrades, issues, or unknown variable about the property. With a foreclosure, you are relying on the bank to fill this out, and they most likely don’t know about any issues with the home, when repairs have been done to the home, etc. A good rule of thumb is to look at the property card at town hall to see if any permits have been pulled for work on the home. If you notice a new roof, deck, or addition, but don’t see a permit listed, it may not have been professionally installed.

You should also be prepared to bid against multiple offers. Not that every foreclosure will result in a bidding war, but a nice home that is in good shape and listed with a substantial discount could result in many other buyers just like yourself looking for a great deal on their dream home. When it comes to multiple offers, the listing agent may request a best and final offer from all bidders. This leaves little room to negotiate and will require you to submit the best offer you feel comfortable with – this includes listing how much of your offer will be cash, how you are paying closing costs, if you plan to do inspections, and how soon you could close.

If you can, it’s important to do your inspections. Since the owners are not available to ask questions, having a thorough home inspection done will give you some peace of mind. You may find that you aren’t able to inspect certain features though. Many foreclosed homes have been sitting vacant for months to even years and the electricity and water are probably shut off. You’ll most likely see tags near all the faucets, toilets, showers that tell you when the home was winterized or drained of water so that pipes wouldn’t burst. Just because these stickers are there, doesn’t mean that the home doesn’t have any burst pipes, water damage, and was winterized correctly – so make sure you choose a home inspector who has experience dealing with foreclosures and knows what to look for.

You must be willing to buy the foreclosed home “as is”. With many foreclosures, the real estate lender will sell the home “as is” and won’t be willing to make any repair requests you may have. However, you can bring any issues to your Realtors attention and see if there is any room in the price to deduct for these issues.

If you are looking to move quickly, a foreclosure may not be your best option. Some foreclosure sales can take awhile to complete and can be frustrating. The process is much more complex when it comes to selling because you are dealing with a company vs. dealing with a person who is selling the home.

Before you buy a foreclosed home, make sure you do as much research on the home as you possibly can. Talk to lenders and brokers who are willing to work with you and try not to go into the process blindly. If you have questions, don’t hesitate to give us a call – we’d love to help!


Jennifer Ives-Groebl
Vice President, Senior Mortgage Lender
NMLS MLO ID: 532621

Author: Jennifer Ives-Groebl

Jennifer has been with Litchfield Bancorp since 1994 and was promoted to Assistant Vice President and Senior Mortgage Originator shortly after graduating the Connecticut School of Finance & Management in 1998. Stationed in both our Torrington and Litchfield locations, Jennifer is well known and respected in the local residential real estate community and recognized as a resource for some of the more difficult transactions. Jennifer resides in Torrington and is actively involved in the local community. She is a long time member of the Torrington/Winsted Rotary club and is currently serving as its Assistant Treasurer. Jennifer is involved with Litchfield County Board of Realtors and serves as chair of the Audit Committee and a member of the Public Relations Committee. She is also a member of the Fuessenich Park Partnership; and through Education Connection, has participated in the Mentoring Program.