Depending on how you plan to buy the foreclosure property, it can take anywhere from 1 day to over a year! Here are the basic stages of foreclosure and how long it would take to purchase the property at that stage:
Pre-Foreclosure – This is a property where the owner has missed payments and is in danger of losing the home to foreclosure. At this point, the bank does not control what the owner can do with the home, as long as they can satisfy the lien against the home. Buying a pre-foreclosure home would be the same as buying any other home on the open market. It’s may be even faster, because the owner has more of an incentive to sell. When you are buying a home this way, it is still necessary to do a full home inspecton, title search, and appraisal. You need to make sure you know what you’re getting into, even if it is still a good deal.
Sheriff’s Sale – A home being sold at sheriff’s sale is one that’s at the very end of the foreclosure process. The home is being sold at auction to the highest bidder and usually has to be paid for within 24 hours. In most cases, the lender will buy the home back at the sale, so they can list it with their own agent. This allows them to keep the home on the market for a longer period and reduces their losses. Many states have a redemption period after the sale, so if you buy a home at a sheriff’s sale, you may need to wait for this period to end before taking posession. (Redemption can last 30 days to 1 year) Just because the home is not occupied, doesn’t mean the previous owner can’t reclaim the house at a later date.
REO – This is a property that is owned by the lender (or lender’s agent) who foreclosed on the property. They buy the homes back at sheriff sale to re-list on the open market. This allows them to get a higher price for the home. These properties are usually sold by real estate agents and you can expect the same time period as buying any other home on the market.
When buying a foreclosure home, you’ll want to make sure you do all the proper home inspections and make sure you do your own appraisal. Foreclosure properties are likely to have many more problems than normal properties listed. Agents selling foreclosure properties are not responsible for disclosing any hidden problems with the home, so it’s up to you to do all the proper research before buying the home. Be prepared to discover these hidden problems and make sure your offer price takes these unknown problems into account.
You’ll also want to determine if an eviction will be necessary. If you have purchased a foreclosure home while someone is still living in it, (owner or tenant) you may have to deal with it yourself. An eviction can take quite a long time if you don’t do it correctly. Make sure you allow time and finances for a proper eviction.