Dear PoPville – Has Anyone Ever Bought a Foreclosed Home?

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“Dear Popville,

Has anyone bought a foreclosed home in DC and if so, could you describe the process and recommend an agent? The foreclosure listings I have read do not permit prior viewing of the property and want all-cash offers which are tough to swallow. Many thanks!”

17 Comment

  • I did a long time ago…

    Now there’s a lot of competition in buying them and they don’t stay on the market long. Chances are that if you find one, it will disappear fast or something is seriously wrong with it.

    There are shows on TV that show the process and risks, one is “Property Wars” in which they show signs of what to look for in a house you can’t get into. Some of that info is useful.

    Your offer pretty much has to be full ask these days because you can easily be outbid with all the market competition.

    Also, your house will need to be livable to be financed, unless you do a construction (203k loan) so you’ll need money in the bank or you won’t be able to be insured.

    Be ware of structural damage, have a person who knows what to look for inspect the place, don’t just trust inspectors who are part of the process. Issues in the foundation can bankrupt you and lead to even bigger problems in your investment like citations.

    Make sure there are no liens on the property, get a title search done and pay title insurance.

    check utility bills due on the property, chances are that you’ll have to pay them before getting services turned on.

    Good luck!

    • Not necessarily true. Nothing was “seriously wrong” with my home, it just needed a good amount of work. The people lost their house. The lady refinanced to buy a Land Rover. Done and done. Advice? Hire an architect (I didn’t have to, I just called him Dad) and let them determine whether the house is a good investment. My Dad looked over a couple houses I wanted to buy and vetoed two due to soil issues on one and a slew of other reasons for the other. He saw the house I ended up buying (in Bloomingdale) and because he OK’d it, and actually took into account ground elevation, I thankfully have not had to deal with flooding issues like many of my neighbors. Set it up correctly and you’ll have no problem.

      • Agree, but if you can’t view the house first, you can’t do any of that. I would definitely shy away from a sight-unseen deal…

      • You do realize that not everyone’s father is an experienced architect who is an expert in the these matters and has your best interest at heart (and for free, too boot)?
        Your privilege is showing.

    • To the point that something will probably be majorly wrong with a foreclosure. I’ve bought two houses in DC. One was a foreclosure and one was a conventional sale. Interestingly, the foreclosure was in FAR better shape than the conventional sale. The owner of the conventional sale home had been renting it out and did not bother to clean up at all after his tenants vacated (thus it was a disaster). The foreclosure had been renovated and vacant for some time, so it was completely clean and problem-free when I closed on it.

  • I did in 2010, but the market was much different then. Even with the hot market, it seems strange you wouldn’t even be allowed to see the property first. I would not take that kind of chance (especially if this is your first time buying). I was able to tour the property, get an inspection and get a conventional loan (I had 20% down). The bank also paid for 100% of my closing costs. For me, it wasn’t much different than buying a house from a normal seller (other than having to wait a few days longer to find out if my offer was accepted).

    • We bought our house (also a foreclosure) in late 2009 and used a regular FHA loan (not a 203k).

      We definitely were allowed to see the property and did have to move fast to get our contract together (3 days and there were 12 buds). But we then had the chance to get an inspection before closing. Our agent was awful, so I wouldn’t recommend him, but I’d think that you should be able to find the same level of access to bank-owned as you do to owner-owned homes with your agent’s help (he/she should have codes to key boxes).

      Our house wasn’t trashed, was had been abandoned for a while and to proceed with our FHA we did have to pay for a couple small fixes (holes in the wall). There can be a whole lot of variance between houses though, so do be sure to get a good inspector. Good luck!

      • 12 *bids, not buds. I should add that we bid significantly over asking (within our budget). It was also our 6th contract after being outbid on a bunch of bank- and owner-owned property, so we had a sense of how far we had to go given the market at the time. It might take some time, but good luck in your search!

  • My parents did this out on the West Coast. Be aware that if the prior residents were foreclosed on, they may have trashed the place, which is what happened to them. They had to put A LOT of money into just some basic repairs like new carpet. It was such a good deal that it was a wash, but heads up.

  • I bought a foreclosed home in 2008 and YES I was allowed to view the home. Obviously, since I needed to hit certain approvals/inspections required for closing. It was bank owned and the agent at the bank was not at all accommodating in terms of getting necessities set up so that I was able to properly inspect the house before settlement. it got to the point where he was making excuses for not going to Washington Gas to get the gas turned on that when I called him to tell him he may interrupt my closing, I was sitting IN washington gas headquarters ready for him to tell them to turn on the gas. There were five contracts behind mine, and I suppose they were hoping my offer would fall through in hopes of making more money. The banks ARE NOT ON YOUR SIDE. Do everything you can yourself to secure the house. My two cents

  • brookland_rez

    Mine was foreclosed. Nothing majorly wrong with it, was vacant for a couple of years and just needed some TLC. I bought in 2009 and the market was not very competitive. I made my offer for under what the bank wanted, and I even got them to make some repairs so I could qualify for an FHA backed loan. I had a good realtor that was good at negotiating with the bank. From what my neighbors have said, I think they lost it due to refinancing too many times.

  • You may not be able to get any financing on a foreclosure. Since 2010 (just after I closed on a foreclosure), the DC government has imposed strict requirements on foreclosures that have caused title insurers not to stop insuring foreclosures. Since mortgage lenders require title insurance, the few foreclosures that sell in DC are going for all cash. (This, incidentally, helped cause the price surge at the cheaper end of the single-family market.)

    To answer your other questions (for when the foreclosure market returns to normal), you should definitely get an agent (we used Jesse Hagopian at the Tom Faison Group; he’s very knowledgeable on the fixer-upper segment of the market) and see the property before making an offer.

    See stories here:,,

    • I bought a Foreclosed DC condo in april and had no such problems financing my purchase with a conventional 30 yr loan. Foreclosed properties purchases should operate no different than a traditional purchase; you make an offer, have it inspected if accepted and have inspection contingencies, then apply for your loan at the same time after contract acceptance. The only difference is you should expect greater maintenance issues, deferred maintenance and some cleanup at the minimum. inspections are imperative to see how much neglect the place has incurred and how much it will cost to make it habitable or renovate to your standards. talk to your lender before you place your bid and show them the listing. they can point out major obstacles toward getting your loan such as safety issues or missing systems that will make getting a loan for that particular property difficult. if its missing a furnace or a kitchen for example, that will pose problems. Only experienced investors who take calculated risks should bid on properties sight unseen.

      • brookland_rez

        That was my experience as well. I had an inspection contingency on mine. I think it has more to do with how competitive the market is. When there’s more competition, the bank can demand all cash offers, etc. But so can traditional sales. At the height of the market in 2005-2006, people were waiving inspection contingencies to be able to buy.

    • I don’t know about that. I bought my house in 2012 and financed/insured it. I also went in and previewed the property multiples times and did a home inspection. My house was in Petworth and was part of the Home Path program by Fannie Mae. Title was clear by the time the property was offered and it proceeded smoothly like a standard sale, though I did have to close with the company that handled the foreclosure proceedings. That actually simplified things because they had done the title work. I didn’t need a title search or anything.

      But for sure, in areas considered ‘hot’ all cash is the only way to win now. Not so in January 2012.

  • The listings that don’t allow you to view the inside of the property are probably trustee sales. Most bank owned properties are available for showings.

  • Thanks for your tips and advice.

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