How to Buy a Foreclosed Home

Even in one of the biggest housing busts on record, there’s opportunity out there. Barbara Corcoran, founder of Manhattan’s largest real-estate company, explained on Monday’s special the best ways to buy real estate for those who are looking at this as a bottom and want a way in. And it starts with foreclosed sales.

The difference between buying a home on short sale and one that’s been foreclosed on, Corcoran said, is that foreclosures afford you the opportunity to deal directly with the bank. This is preferable because banks have no discernable interest in a particular property – they just want to unload their inventory at rock bottom price. With short sales, you have to deal with individual owners who may still be attached to their homes and thus less willing to negotiate. If you have the option, choose to buy foreclosures over short sales, Corcoran said.

There’s also the auction option. Many people don’t get good deals on homes in foreclosure auction because they don’t know how to play the game. According to Corcoran, there are a few ways you can prepare for auction. The first is to do your homework and go slow. Auctions appeal to people’s competitive emotions, so scope some out to get comfortable before you go all in. And do your homework by knowing exactly what you want to spend ahead of time, including going prepared with a photo of each home you’re interested in. You would be surprised how many people accidentally bid on the wrong homes, Corcoran said.

Finally, Corcoran suggested this little nugget: wear nice clothes and stand near the auctioneer. Why? Because people might think you work for the bank, and then all bets are off – literally.