People are always asking me how to find a foreclosure to buy in Rhode Island.  I don't think everyone understands the procedure so I thought I would clear it up.

Where can you find a property before foreclosure?

In Rhode Island, the foreclosure does not need to be filed in the courthouse as it does in other states.  The entire process COULD take as little as 110 days from the date of the first missed payment.  The lender is allowed to start the process 60 days after the first missed payment.  They must then send a letter to the homeowner.  Once that is done, the lender must advertise the sale 3 consecutive weeks before the sale.  All this being said, I have seen them take much longer, most banks want to avoid this if possible. 

So, the answer is, the only place to find a property before foreclosure is to either get inside information from someone who knows the homeowner is in trouble or find it in the paper.  Once they are in the paper the house is well into the process and now many fees have been tacked onto what was originally owed.  You can find them listed as short sales in MLS, I will cover this separately.

This is not the market to buy a pre-foreclosure in.  I have been to foreclosure sales, there are usually no bidders.  If the house was bought or refinanced in the last few years the amount owed is too great to make it worth buying a house sight unseen.  There is no room for profit, therefore the bank will most likely be taking it back.

If you notice a property in the paper that says the loan that is being foreclosed on is from before, say 2004, it's worth looking into.  But be very careful, there are liens that are not wiped out at the foreclosure sale, you must research everything owed on the property, that means a trip to the town hall and a lot of investigation.  Also, you often can't see the property before buying so you don't know if there are structural problems and if everything is in good working order.  Another thing to keep in mind is the mindset of the homeowner - are they going to take care of the house that is being taken away from them?

How can I buy the house after the foreclosure sale?

Most banks I have dealt with will not deal with a buyer directly.  They usually have an appraisal done on the property and then list it with a Realtor®, this does take quite a bit of time - you are likely to see the home vacant for awhile.  The properties are then listed in the Statewide Multiple Listing Service just as any other home.  They usually have some kind of language like "proof of funds or prequal must accompany all offers", "corporate owned and sold in current condition"or "special addendum". 

These are often the best deals going.  You can view the property, get an idea of what you're buying.  The banks don't want to be landlords, they want to get properties off their books.  There is no fear of insulting them.  Make an offer!!!!  This is the time to buy. 

 The interest rates are at record lows. 

 I have even heard of banks working with some of the down payment assistance programs, so some may be able to buy with no money down.  What is there to lose?