How to Find a Bargain Home in these Lean Times US

Finding bargains in housing in the United States is unfortunately, very easy. If you're looking for real steals in real estate be ready to do a bit of research, but you do not have to use pay sites to find foreclosed homes.

A bit of background before we go further. REO stands for Real Estate Owned (usually bank owned) homes or foreclosures. Many times this will never be listed on the ad you find for the home, but there are certain clues that will let you know. Look for specifics on earnest money and statements in regards to pre-approval being necessary. Nine times out of ten, if the description states the amount of the earnest money required and a pre-approval letter, you've found a foreclosure.

This applies to the major real estate listing sites, specifically those like Realtor.com, Trulia.com and Zillow.com. However Zillow is going to throw those unspecific, no address, no picture listings and try to sell you a pay foreclosure site. I recommend using Zillow for it's great estimations after you have found the exact address on a home you're interested in.

If you don't find a home through the major channels, or you want to see what else is available, you can search for foreclosure listings directly in the sources.  Two of the major lenders in the US are Fannie Mae and Freddie Mac, by simply typing in "Fannie Mae foreclosures" in your favorite search engine you will find their listings.  This works for most lenders including banks.  By typing in a search for HUD foreclosures you will also get links to other government funding agencies such as the Veteran's Administration.

How to Find the Starting Point for your Bid

If you find a home you love or homes, write down the address(es) and then you have two avenues to find out what was owed on the home when it was foreclosed on and previous sales data.  First try finding the county tax assessor site for the home's location.  By simply plugging in the address you will get what the tax assessor has as far as size of the lot and home, number of listed rooms, You will also find the sales data for the home.  If this is not listed you have another avenue by using Trulia, again plug in the address and then scroll down to see sales data.

You will also know the bank/mortgage company that currently owns the home.  It has been my experience that large non-local banks are more willing to take lower offers, sometimes 1/3 of what they have in the home.  The exception appears to be non-local mortgage entities that were some of the key players in the sub prime mortgages.  Government entities such as Fannie Mae will take lower, but not exceptionally so bids, but they their own funding and often times only require as small as a 3 % down payment.

Your next step is to ascertain the comps or the recent sales figures in the location the home is located.  For that Zillow has maps showing recent sales or the local Realtor multi listing service often times provides recent sales data.  

Preparation to make the Bid

Find a good buyer's agent to represent you, these professionals are invaluable in helping get your bid to the right people as well as helping you find the most recent comps and helping you decide your starting bid.  As with most foreclosures you will need pre-approval for a set amount of your mortgage and anywhere from $1000 to $3000 in earnest monies.

Make sure you see the house in person and be diligent in checking it out.  Often times foreclosures were a difficult time for the former owners and things may be left behind or it may have been vandalized being vacant.

Finally check with your local city/county agencies to see if there is financial help available for areas where there are large numbers of foreclosures.  Empty neighborhoods and blight are a plague in some larger cities and to counteract the effects there are grants available.

Disclaimer:  I am not a real estate professional.  I found three homes using the above methods, one for myself and two for friends.  I do no represent any of the search engines or real estate web sites mentioned in the article.