How to Buy a Foreclosed Home in Texas

How to Buy a Foreclosed Home in Texas
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Foreclosure is due primarily to circumstances such as a homeowner's inability to repay or keep up with payments on their mortgage. In Texas, once the property has been foreclosed on by the lender, it is placed on the county auction block and is available for bid. Should the house fail to sell at auction, it remains property of the bank and the lender will place it on the open market for sale.

Finding and Purchasing a Texas Foreclosure

Interview real estate agents and select one to represent you in the transaction. Ideally, this should not be the same agent as the one representing the bank on the selling side of a transaction.

In Texas, real estate agent involvement is a requirement in any foreclosure purchase. Since foreclosure transactions can be complicated, it is best to hire an experienced agent.

Agents can be appointed to represented a buyer using a recommendation of the brokerage office holding the listing. This appointment will also be at the personal discretion of the broker (owner) of the office.

Visit properties that meet most closely your preferred criteria. Some properties may only be available with a cash-based purchase due to age or damage. Take a moment to review the financing methods available for a property, before a visit.

In addition to the financing differences, some bank owners might require that a buyer pre-qualify through their institution to verify that they are, indeed, a qualified buyer. This does in no way mean that the buyer has to use the lender for the loan process; it means that they must simply allow the lender to verify their finances and credit history. It is extremely common in Texas real estate.

Complete a One to Four Residencal Contract under the guidance of your real estate agent. This document outlines the fact that you are making an offer to purchase the property and are not purchasing it unless the bank owner accepts the offer.

Should you have questions about the purchase contract, contact a real estate lawyer. Agents are not permitted to offer legal advice, they can offer only their opinion.

Go through each item on the contract such as purchase price, down payment, closing date, repairs, and option period. Make certain you understand each section prior to signing the offer. Be prepared to present a financial pre-approval letter from a lender (or proof of available funds if making the purchase in cash) to accompany the offer.

Prepare for several trips to the negotiating table with the lender for items in relation to price and closing date. The lender's goal is to close on the property as soon as possible, for the highest price possible. It might take as many as three or four times before both parties are able to reach an agreement.

Once an agreement is reached, the contract becomes executed and the closing date of the property is set. Once closing is completed, the purchase has been successful and ownership is transferred.


  • Bid quickly on foreclosures, they don't tend to last long on the market.