You don’t need to show up at courthouse auctions or comb through legal filings. These days many banks sell foreclosed homes through real estate agents.

To find listings, look on sites that specialize in foreclosed properties, such as realtytrac.com and foreclosurepoint.com. The local multiple-listing service often has selections as well. (The fact that the home is in foreclosure is not always highlighted in the MLS, but it’s often mentioned in the description.)

Finally, some agents specialize in foreclosures, so call your local realtor’s office and ask for a referral.

2. It’s best to buy from a bank

If you buy a foreclosed home at an auction before the bank repossesses it, you’ll have to pay in cash, and you usually cannot inspect the property. You may also later discover that there are liens against it.

When a bank takes back a home, however, it will clear any outstanding liens. Plus, when you buy a bank-owned property, you can inspect it beforehand, and you can finance the purchase with a mortgage. Leave your suitcase full of cash at home.

3. Bring in a contractor before you buy

Many foreclosed homes have been abandoned, some even vandalized, and they often require major repairs. “One mistake a lot of people make is underestimating how much work it needs and the cost,” says Rick Sharga of RealtyTrac.

To avoid getting stuck with a surprise bill, ask a contractor to give you an estimate of how much the restoration will cost and how long it will take. Many will do so for free in hopes of winning your business.

4. Bid low

Banks aren’t necessarily selling foreclosures at fire-sale prices; some are listed at market value, says Gene Hacker, a broker in Orange County, Calif. So be prepared to haggle. The bigger the inventory of foreclosed homes the bank has and the longer the property has sat, the greater your chances of nabbing a great deal, says Chris Matty of ForeclosurePoint.com.

Set your initial offer about 20% below market price – or more if your area has a lot of foreclosures.

5. Be prepared to wait

While some lenders are getting back to bidders within 36 hours, others are dealing with an enormous backlog that can hold up their response for as long as three months. While you wait, someone can trump you with a higher offer.

To boost your chances at scoring a home you love, have multiple properties in mind, and get your financing pre-approved before you bid. Even if the lender says it has another offer, follow up every week – these deals can often fall through.  To top of page

AAA Rating:

This is a security rating, in terms of how secure a company, share or bond is. A triple A rating is the most secure rating that can be achieved.

Accrued Interest:

Interest that has been calculated, since the last interest payment, and is owed but is yet to be paid.

Additional Repayments:

This is any extra payment you make on top of the minimum monthly payment are required to make to service your loan.

Adjustable Interest Rate:

A loan that has an interest rate that changes through the term of the loan. It usually varies in accordance with the official market interest rate.

Amortization:

The repayments of a loan that cover both principal and interest. These repayments are scheduled in installments over a period of time.

Application Fee:

This is the fee charged by lenders to set up and process a loan application. Paid up front, it is usually refunded if the loan is declined. Also know as establishment fee.

Appraised Value:

The estimated value of the property, however not necessarily an accurate market value of your property. This is needed by lenders, offered to them as security for your new home loan.

Arrears:

When behind on your repayments this is the total of unpaid loan repayments.

Assets:

Real estate, a car, securities, cash and other items of economic value owned by an individual or corporation.

Basis Point:

One hundredth of a percentage point (0.01%) Used to measure the rate of interest.

Break Cost:

The fee charged for switching from a fixed rate home loan to a adjustable rate home loan before the fix rate period has expired.

Bridging Finance:

A short term loan that enables you to purchase a new property whilst you await the sale of your existing property.

Capital Gain

: The profit from the sale of a property. It being profitable when the sale price is higher then the purchase price.

Capped Rate Loan:

Like an adjustable rate loan but, the interest cannot exceed a specified rate for a set period of time.

Certificate of Compliance:

A certificate that confirms Council building regulations have been followed in regards to a specific property. This can be obtained from Councils for a fee.

Certificate of Title:

A certificate issued by a government body that proves ownership of a property and details dimensions and encumbrances on it e.g. mortgages.

Community Title:

A property title establishing ownership of a club house, swimming pool and other communal dwellings to be shared among all dwellers of a particular estate.

Company Title:

A property title where a company owns the whole of the property, and by purchasing shares in the company, the purchaser gets authority to reside in a particular area of the real estate.

Compound Interest:

Interest that is added to the principal before it is next calculated. Funds earning compound interest grow at an exponential rate.

Consumer Credit Code:

A law that was passed to protects individual that are borrowing money from the lenders. It gives the individuals certain rights and make the consequences of the loan more transparent by requiring lenders to provide certain information about their loan.

Contract:

A legal agreement made between to or more parties.

Contract for sale:

A contract that lists the details and conditions of a sale/purchase.

Conveyancing:

The legal process where ownership of a property is transferred from the old owner, the seller, to the new owner, the buyer.

Covenant:

An agreement in regards to the usage or nature of property on specific lands.

Credit Bureau:

An organization that records people’s credit history and is authorized to issue credit reports, on individuals, to lenders.

Credit Limit:

The maximum amount a lender sets, on a loan, for the borrower to borrow up to.

Credit Reference or Credit Report:

This is a report detailing an individual’s credit history. Used by a lender to assess the risk of lending to people, it can only be obtained with permission and from authorized credit reporting agencies.

Daily Interest:

Interest that is calculated daily.

Debt Service Ratio (DSR):

This is a measure of ones ability to service a debt. Usually expressed as a percentage of ones income in comparison to the individuals expenses.

Default:

When you fail to make a loan repayment by a specific date.

Disbursements:

Expenditure incurred by the services of third parties in relation to finalizing your mortgage e.g. solicitor and government fee’s for title searches and registration.

Early Repayment Penalty:

This a fee charged by lenders if you pay off your home loan early. Not all lenders charge this fee.

Equity:

The amount of the property value that you own. Every bit of principal you pay from your home loan becomes your equity. Any rise in the value of your property becomes your equity. To work out how much equity you have in your property take the current market value of the property and subtract the outstanding home loan balance.

Establishment Fee:

(See Application Fee definition)

Exchange of contracts:

When the buyer and the seller exchange contracts this locks them into the stated course of action. The buyer must buy and the seller must sell. However some states allow a cooling off period after the exchange of contracts.

Exit Fee:

This is a fee charged by lenders when the borrower wishes to refinance their loan with another lender, within a specific time period from the start of the loan. Not all lenders charge this fee.

Facility:

Another name for your loan account.

Fixed Interest rate:

A home loan that has its interest rate locked to a specific rate for a set period of time. Fees may apply in relation to early repayment or switching to variable rate loan.

Garnished:

Having money diverted from your income, to another party, before you receive it.

Gearing:

The ratio of property income to repayments needed to service the loan.

Government or statutory charges:

These are charges payable by an individual that have been incurred only due to various government laws, that are in place. E.g. Stamp duty and mortgage duty. The charges vary from state to state.

Guarantee:

Where a third party promises to repay the home loan if the borrower defaults. This is a form of security for the lender.

Guarantor:

The person giving the guarantee to the financial institute.

Interest:

In reference to a loan, interest is the fee charged by a lender to a borrower for the use of borrowed money. This is usually expressed as an annual percentage of the principal; the interest rate.

Interest Only Loan:

This a loan where your minimum repayments over the term of the loan only cover the interest. You are not obliged to pay any principal until the end of the loan term, where the principal is due in full.

Joint and Several Liability:

Where a loan is taken out jointly, by two or more people, all parties are responsible for the loan and must make repayments. In joint loans if one party defaults, all parties are held responsible.

Joint Tenants:

Where two or more people own a property. In the case of death to one or more parties involved the title reverts to the remaining survivors.

Lease:

A contract that allows residence of a property for a set amount of time.

Lenders Mortgage Insurance:

This is insurance that protects the lender against the borrower defaulting. The insurance premium is usually paid by the borrower, however it does not offer them any security at all. It only gives the lender some security.

Liabilities:

A person’s financial obligations or debts.

Loan Agreement:

The contract between the borrower and the lender. This document will outline all the conditions that apply to the loan.

Loan Security Duty:

Charged by the government for the registration of a mortgage. Also know as Loan Stamp Duty or Mortgage Stamp Duty.

Loan to Valuation Ratio (LVR):

This is a comparison of your loan amount to the value of your property. It is usually expressed as a percentage. For example, if you have borrowed $90,000 and your property is valued at $100,000, the LVR would be 90%

Lump Sum Payment:

These payments are additional and serve the purpose of reducing the loan amount. (See Additional Payments)

Mortgage:

A form of security for a loan over property. The lender has the right to the property if the borrower defaults on the loan repayments.

Mortgage:

The person or institute lending you the money and taking security over the property.

Mortgagor:

The person borrowing the money and providing the property as security.

Negative Gearing:

Where the income derived from the property is less then the costs involved with obtaining and maintaining the investment. The difference can be used as a tax deduction.

Overdraft:

Where a borrower can exceeds the account balance limit, to a predetermined amount, assigned to them by the lender.

Power of attorney:

Where authorization is given to another to act as ones legal representative.

Principal:

The amount borrowed, or the amount borrowed which remains unpaid. In reference to your monthly home loan payments it is the part of the monthly payment that reduces the outstanding balance of a home loan.

Principal & Interest Loan:

A loan where the interest and the principal are repaid together through the repayments.

Private Sale:

A property sale that does not go through a real estate agent.

Redraw Facility:

A facility that come with some loans where by if you have made any lump sum payments/additional repayments you can then access and use that money.

Refinancing:

Switching lenders by finalizing your current home loan with money obtained from a new home loan. This is a home refinancing loan.

Reserve Price:

A minimum price that a seller will accept from a buyer.

Search (Title search):

A search that provides you with details of ownership and encumbrances of a specific property.

Security:

Property which is used to guarantee a loan.

Settlement:

The finalization of the process needed for a buyer to take possession of property. All documents are finalized and handed over between seller, buyer and lender.

Settlement Date:

The date at with settlement (see above) will take place.

Signatory:

The person who’s signature is on an account and grants them access to it.

Survey:

A plan of the land that details the positions of buildings and boundaries.

Tenants in common:

Similar to joint tenants, in that, more then one person owns a share of the property. However unlike joint tenants the parties are free to sell or gift their share as in sole ownership.

Term:

The duration of a loan or a specific time period within that loan.

Valuation:

A report giving a professional opinion regarding the value of a property.

Vendor:

1 Good kitchens help sell property, but they have to be attractive as well as functional. A kitchen is also the most expensive and inconvenient room to refurbish, so its condition will influence the value of your property.

2 Use your eyes: does your kitchen look dated? Check out what’s new in kitchen design to pick up some ideas. Handles on unit doors, for instance, are easy to change and an inexpensive way to give kitchen units a lift. Choose handles that are similar in size and shape to your existing ones so that fitting them does not leave holes or marks. Replace damaged or missing cupboard doors.

3 Remove all evidence of pets. Put bowls, beds, bones etc out of sight. Never have caged rodents, birds or other fauna in the kitchen when showing your home.

4 Kitchens should smell fresh and clean, so use your sense of smell. Even with extractor fans, kitchens can harbour odours, especially from fish, curries and other strong-smelling foods. Opt to go out or keep your cooking bland if you have visitors the next day.
A kitchen should always smell clean and fresh.

Credit: Magnet

5 Baking bread and brewing fresh coffee does not enhance the saleability of property. The aroma of baking makes us feel hungry (which is why supermarkets use it to encourage us to buy food). It does not make us desire a new home. If you’ve made coffee you should really offer a cup to your visitors, but do you really want them hanging around for a chat? Not on a first visit certainly, so leave the coffee till they return for a second view.

6 Use your ears: do not run appliances in the kitchen when showing your property. You want to create an impression of calm, efficiency and style, not humdrum housework.

7 Does your tap drip? If so, have it fixed (or think about replacing it if the style is dated or limescale-encrusted).

8 Use your sense of touch: is your kitchen really clean? Run your fingers over the work surfaces and units to feel for stickiness or grease. Units must be spotless, inside and out.

9 Keep surfaces as clear as possible. Put anything away you do not use on a daily basis. This will also make your kitchen easier to keep clean.

10 If your kitchen is large enough to accommodate a table and seating, make sure there’s one there even if you have a separate dining room; an extra eating area in the kitchen suggests value for money.