How to Finance a Foreclosure Auction Sale?

The process here in MD is that after a foreclosure sale, the court takes about 30 days to ratify the sale, then the entire purchase price is due at closing. This allows time for financing to be obtained.

The question is: After the sale but before closing, I don’t have posession of the property. It is probably impossible to allow a lender’s appraiser to enter the property.

How do I get a loan with this issue? I do not want to use hard money. Are there lenders who will approve a mortgage simply based on MLS comps and no appraisal? Assuming I can buy at say 75% market value and put 10-20% down. Will they approve?

Thanks in advance for your time and knowledge!

Some lenders will allow you to qualify using an appraisal waiver. They use local comps and tax appraisal to calculate value. If you are getting a decent price on the house this may work for you.

There are lenders that will do it for you if the property hits on an AVM. There are only a few lenders left doing it after recent changes to the sub-prime market. Do you have a mortgage broker that you use currently?

The bank’s appraiser can still do a drive-by appraisal and give them a pretty good estimate of value.

Ask your appraiser for a “price opinion”. He’ll likely give you one over the phone, right then and there. Mine does. Nothing in writing, and it’s his best guess, but if he’s up on the market, he should have a good idea.

If the original owner is still living in the property, contact them. If you intend to buy and hold let them know you’re the new landlord and that you need to inspect the property. If you intend to flip arrange a meeting where you offer them a financial incentive to leave gracefully. Such offer would be contingent upon inspection. If the property is vacant, it may be because the bank filed an “order to vacate” and they may have the keys. Contact them through the attorney listed with the sale trustee.

I do not believe a lender will approve my mortgage based on my own appraiser’s “price opinion” So I do not believe this method will work.

I like your idea of offering the original owner a financial incentive to allow my lender’s appraiser to come in. However, I can’t rely on this working with every owner, everytime. I can’t risk not getting a loan based on a failed appraisal b/c he could not get into the house. My best bet is probably to find a lender who will approve a loan based on a “drive-by appraisal” or waive the appraisal altogether and simply base it on comps and tax value.

Now I simply need to find these lenders and still get a good rate. Thanks for all your great responses!

Same thing as a “drive by”. Make sure you use an appraiser that the bank you’re trying to use deals with. I’ve had over the phone Price opinions match up within $1000 of the final appraised price.

You make it sound like it is next to impossible to get on the property, so that aren;t many options, unless you trespass when they aren’t home. lol

I am having difficulty finding a lender who will loan without an appraisal or with a “drive-by” appraisal.

I am in Maryland. Purchases would be from foreclosure auction with about 75% ARV. 30 day window available after auction date. I do not wish to use high interest/point hard money.

If anyone can help or provide a reference I would greatly appreciate it.

Thanks in advance!


I have done some looking into this for you and from what I have found there are now no lenders that are going to do a purchase for you with no appraisal. If it were a refi, then yes… but not on a purchase. Also, your purchase price is always going to be 100% example if the property is worth 100k and you buy it for 70k, the 70k is still 100%. Granted it is under market value, but you are still looking to finance 100% of the purchase price. In some cases the seller can hold a private 2nd for you… but not when you are buying from the court house. I hope this helps some, I know its not what you want to hear. I am a mortgage broker if you need anything send me a message and I’ll be glad to try to help!!

I would not be financing 100%. I can put 10-15% down payment. Does anyone know of a lender or broker who can help me finance with an AVM appraisal or a drive-by appraisal?

I doubt everyone who buys at foreclosure sale pays 100% cash or uses hard money. Any suggestions or solutions would be greatly appreciated!

Why don’t you just find a hard money lender who does a short term bridge loan? Then once you have the property you can refinance it with an appraisal and pay off the bridge loan. That way you only have to pay high interest for 30 to 60 days.

On a loan of $250,000, I would be paying the hard money lender at least 5 origination points which is $12,500 right up front. That eats out most of my profit.

If your margin is so tight that five points ruin it for you, it’s too tight a deal to begin with.