Can I buy a home directly from an owner facing foreclosure?

[January Johnson]

Can I buy a home directly from an owner facing foreclosure in advance of the foreclosure auction?  For example, I see a home up for auction, and the amount owed is about $38,000.  Assuming this is the only debt (and I understand the importance of a title search), could I make a deal with the owner to buy the house for $38,000 (paying it directly to the bank where it is owed)--effectively saving them from having a foreclosure on their record and getting a house worth way more for only $38,000?  This seems possible but too simple.  Looking forward to your sage advice!

[John Thedford]

You can purchase it BEFORE the auction. You must reach a deal with the owner and it must be at least enough to extinguish the mortgage. If it is worth far more than the amount owed there may be another reason such as a superior lien, etc. You would need to get a contract with the owner, and use a title company. They would get payoff figures, etc and you would need to close before the sale. I purchased one last year and we closed three days before the auction. Although it still showed up on the county auction website and was "bid on", we closed prior to the sale. Time is going to be of the essence in these types of transactions. Generally, it may be tough to get fast quick answers due to attorneys and banks being involved. In my deal, I had a contract for several weeks before the auction. The owner found out about the sale roughly a week in advance, and I didn't get payoff figures till four days prior to sale. We waited and waited weeks before they finally were able to provide that info, and it quite possibly might never have occurred being so close to sale date. Last but not least: DON'T sign contracts with owners unless you have funds. They are already in a bind and the last thing they need is their hopes raised and then get let down.