How Much to Offer On a Foreclosed Home

Reader Question: What is a good price to offer on a foreclosed home?

This is a hard question to answer because so many variables are involved. The process of buying a foreclosed home varies from one state to the next, one property to the next, etc. It's much less predictable than a regular home purchase. So while I can tell you how the bidding process usually works, I can't offer any specific pricing strategies on a hypothetical property.

There are several scenarios through which you can make an offer on a foreclosed home. It depends on how far along the foreclosure process is for that particular home. For example, if the bank allows the homeowner to sell the home through a short sale process, then your purchase offer will need to be approved by the lender (not by the seller).

However, if the bank / lender has actually foreclosed on the property, then you will probably have to attend a real estate auction to bid on the home. In this scenario, the home will be listed at a starting price, and the auction attendees will then bid on it. The highest bid wins, like any other auction. One thing to realize is that you'll need financing lined up before attending a foreclosure auction. You must be able to buy the property that very day, if you happen to be the highest bidder.

Another scenario takes place if the home does not sell through the foreclosure sale / auction. In this case, you can submit a sealed bid to the owner (which will be the bank or lender who foreclosed on the property).

See also: The Foreclosure Buying Toolkit