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How to Buy a Foreclosed Home in Illinois

In October of this year (2009) Illinois had the third highest state total of foreclosure filings according to RealtyTrac. One in every 263 Illinois homes had a foreclosure notice in October. In the Chicago area alone, there were 18,541 homes foreclosed upon. When homeowners owe more than their homes are worth and can’t keep up with mortgage payments, that creates a spike in foreclosures. And for anyone interested in how to buy a foreclosed home in Illinois, now is a good time to learn.

With the near record amounts of foreclosed homes in Illinois right now, a prospective buyer really does have a huge selection of properties available. Once a homeowner receives a foreclosure notice, it might take as long as seven months before the property is put up for auction. So when you start looking for foreclosed homes, you need to keep that in mind.

Where do you find foreclosed homes in Illinois? You can log onto the Internet and find dozens of companies advertising lists of foreclosed homes in your area for a fee. But you don’t necessarily have to pay for a list. Many banks advertise foreclosure auctions in local papers, so check that out first. Also, most banks have a division or individual employee who handles foreclosures, so a few phone calls to local lenders should be able to put you in touch with the right people who will e glad to provide you with a list for free. You can also access public courthouse records via the Internet or at the courthouse and research foreclosure filings that way. But contacting mortgage companies and banks is probably the easiest and quickest way to find them.

You then need to decide how you want to go about purchasing a foreclosed home in Illinois. Pre-foreclosures are homes that have a foreclosure filed on them but the bank or lender hasn’t yet taken possession of the property. In this scenario, you could actually get the home cheaper than at auction by working with the distressed homeowner and the lender. Occasionally the lender may even be willing to work with you on financing the home.

The next way to buy a foreclosed home in Illinois is at auction. Once a bank has foreclosed on a home and the required amount of time has elapsed for the homeowner to be evicted, they will usually put the house up for auction. Depending on the amount of interest the auction generates and the bidding competition you have, you may be able to buy the property at a good price.

Homes that are in good condition and a desirable location may draw a lot of other investors and people just looking for a new place to live, so be sure to come prepared with an idea of how much the property is worth and how much you are willing to bid. Check out the foreclosed homes in advance. You can even have them appraised or have a contractor check them out, but that will cost money that comes out of your investment and profit. Also find out if back taxes are owed, how much current taxes are and if any liens or other fees are attached to the foreclosed property.

At foreclosure auctions, the homes are usually sold one of three ways. Absolute means it will be sold to the highest bidder no matter what the price ends up being. Homes auctioned with a minimum bid means that bidding will begin at a set price and no lower. And foreclosed homes sold with a reserve means that the bank or mortgage holder has the right to not accept whatever the highest bid ends up being if it doesn’t meet the price they had wanted.

At a foreclosure auction you will also need to bring a cashier’s check for a certain amount in order to bid. Be sure to know in advance how long you have before you have to close on the property and come up with the balance as well. And find out before hand if there are any buyer’s premiums or fees attached to the winning bid.

REOs are real estate owned properties. That means the bank or mortgage holder has foreclosed and has clear title to the home. Since most banks are usually very willing to sell their REOs and more interested in money than being a landlord, you can often get a good deal this way. Holding an auction is time consuming, adds additional costs and often doesn’t produce a buyer or enough of a return. Because of that, bank owned REOs could be your best and easiest bet when buying a foreclosed home in Illinois.

Illinois foreclosures can be a good investment right now and even a great way for first time homebuyers to make a purchase. Just remember to always be as informed as possible and don’t get carried away and bid more than you can afford or more than the home is worth at auction.

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