Whether you're a property investor, house flipper, or regular home buyer, knowing how to buy a foreclosed home in North Carolina can create a good opportunity to get a property for less than market value.
North Carolina's foreclosure rate ranks No. 15 the U.S. — one foreclosure in every 3,750 housing units.[15] In the past year, North Carolina home values have depreciated by 0.57%. In the next year, North Carolina home values are expected to rise 2.87%.[16]
In this 9-step guide, we'll explain how to buy foreclosed homes in North Carolina and help you decide if buying a foreclosed home is right for you.
⚡ Get expert help: Foreclosure transactions are tricky. Get help from an agent who does these transactions all the time.
How to buy a foreclosed home in North Carolina in 9 steps
1. Get pre-approved for financing
When purchasing a foreclosed home, the type of financing you need depends on the stage of the foreclosure process. Foreclosure auctions typically require buyers to pay in cash, but you can finance a pre-foreclosure or bank-owned property using a traditional home loan with mortgage payments.
🚨 Keep in mind…
Generally, traditional financing isn't an option for foreclosure auctions, so you'll need to either borrow from a hard money lender or use cash. Most buyers use their own cash at auctions because of the steep interest rates of hard money loans.
If you don't have the cash to purchase a foreclosure outright, you'll need to show proof of financing from another source — such as a pre-approval letter from a mortgage lender.
- A pre-approval letter indicates the amount you're qualified to borrow, based on your credit score and financial situation.
- Sellers aren't likely to take your offer seriously without pre-approval.
- See if you're eligible for down payment assistance programs in North Carolina.[17]
If the foreclosure is in livable condition, you can usually take out a conventional loan or federally backed mortgage loan program like FHA, USDA, and VA loans. North Carolina buyers can also utilize state-specific financing programs, such as the NC Home Advantage Mortgage program.[18]
2. Find a top North Carolina real estate agent with foreclosure expertise
Whether you’re a property investor, flipper, or new person to the foreclosure market, it always helps to have a top North Carolina real estate agent on your side who has experience with foreclosures.
A seasoned foreclosure-centric agent can:
- Monitor the fast-paced foreclosure market
- Leverage their network to find out about foreclosure listings before anyone else
- Understand hyper-competitive foreclosure auctions
- Assess the true value of a foreclosed house
- Navigate through unique challenges, such as property damage, liens, or occupancy issues
- Assist with paperwork and legal requirements
- Walk you through the long closing process
To find an agent with foreclosure experience, start by searching online for agents specializing in distressed properties or those holding certifications like Certified Distressed Property Expert (CDPE) or Short Sales and Foreclosure Resource (SFR). You can also attend foreclosure auctions to meet professionals in this niche or check with local banks to see if they have any agent recommendations.
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3. Find foreclosed homes in North Carolina
If you want to learn how to find foreclosed homes in North Carolina, start by focusing on pre-foreclosures and real estate-owned (REO) properties.
These types of properties enable you to inspect and appraise them before making an offer, just like a traditional sale in North Carolina.
You can also work with a real estate agent to locate these listings. Foreclosure auctions, by contrast, often involve competitive bidding with experienced investors, and you may have to buy sight unseen.
In North Carolina, you'll typically find the most foreclosures in these counties: Jones, Craven, and Pasquotank.[15]
The foreclosure market is tight, and you'll likely face competition. Here are a few places you can search to find foreclosed homes in the North Carolina real estate market.
Foreclosed homes can be difficult to track down, but you can start your search with a tool that does the searching for you, like Foreclosure.com. Search by state and county to see a list of foreclosed homes near you.
This platform gives you access to the most comprehensive foreclosure marketplace on the internet — and often has new pre-foreclosure and REO listings before they hit a wider market. If you want to "test before you buy," you can get a free preview before proceeding to a monthly subscription.
You can find traditional listings, foreclosures, and short-sale properties on Xome.[1] Their online auction platform lets you bid on multiple properties, while getting help from customer service if you have questions or concerns.
Read our review to learn more about Xome and how to use it as a buyer or investor.
You can find North Carolina foreclosures — including pre-foreclosures and bank-owned properties — by asking your real estate agent to search for them on your local multiple listing service (MLS).
Only licensed real estate agents have access to the MLS, so you can ask your agent to alert you before the properties are syndicated to popular real estate sites.
To find the right foreclosure, you'll have to search government or bank foreclosure directories. These directories list all homes that have been foreclosed on by the government or lender.
Leading government foreclosure directories include:
- The U.S. Department of Housing and Urban Development (HUD) home store[2]
- The Department of the Treasury’s list of IRS-repossessed foreclosures[3]
- Fannie Mae’s HomePath[4]
Sources of bank-owned or REO foreclosures include:
- Wells Fargo REOs[5]
- Bank of America REOs[6]
- Bankownedproperties.org[7]
You can find auctions listed in the real estate or legal notices section of your local newspapers online[8] or by searching "foreclosures" on auction.com.[9]
⚠️ Seriously consider auctions only if you're experienced in real estate, have substantial cash reserves, and are willing to take the risk of buying a home sight unseen.
4. Tour foreclosures in person
Touring a foreclosed home in person before you submit an offer is always a good idea, as it will give you a sense of the property's strengths and potential problems. But properties in different phases of the foreclosure process offer various levels of accessibility.
- In pre-foreclosures and short sales: Buyers are often desperate to sell, so they may let you take a look at the property if it will help close the sale. But they may also be unhappy about being forced out of their home — and not excited about enabling the process.
- At foreclosure auctions: You’ll rarely be able to inspect foreclosure auction properties in person. Many of these properties are still occupied, and those occupants won't want to help the bank sell their homes. Other properties may be abandoned or dilapidated and are being sold as is.
- Bank-owned (REO) properties: These properties are usually sold on the open market with a real estate agent, so they’re generally easy to tour in person.
When touring foreclosed properties, look for red flags. These might include significant damage to the foundation, evidence of harmful substances, or multiple distressed properties in the area.
You can schedule an inspection later to gain a more comprehensive understanding of the property's issues, but this initial visit will indicate whether it's even worth pursuing. If you can’t tour the property in person, drive or walk by to see if the home has been vandalized or is currently occupied.
If you're a real estate investor, have a contractor assess how much work they think needs to be done on the home and what it'll cost. This step is crucial for determining the after-repair value (ARV) of the home, which can help you determine your potential profit when reselling the home.
5. Submit offers
If you’re not purchasing a foreclosure at an auction, submitting an offer on a foreclosure is a lot like submitting an offer on a conventional home. Here are some tips to make your offer competitive:
- Don’t lowball: The bank will likely know what the property is worth on the market and isn't desperate to offload it for pennies on the dollar.
- Include your mortgage pre-approval letter: Your offer will be stronger if the seller knows that financing won’t fall through.
- Put as much money down as possible: A sizable down payment signals you’re a serious buyer.
- Be patient: If you’re buying from a bank, several different people and departments will need to approve the sale.
REOs usually have more specific rules for submitting offers. Each lender treats this a bit differently, but you'll want a letter of pre-approval, and you should always follow their instructions for submitting offers. A good real estate agent can help you navigate this process.
⚒️ Don’t forget to budget for repairs!
Foreclosed properties often require significant repairs due to neglect or intentional damage by previous owners. On average, repair costs for homes in North Carolina range from $16,500 to $33,000.
The extent of repairs needed often reflects the length of time the property sat vacant and the level of maintenance it received during the foreclosure process.
Common issues with foreclosed homes include water damage, mold, outdated electrical systems, and HVAC problems, which can be expensive to address. Cosmetic repairs like painting, flooring, and landscaping are typically needed to restore the property's appeal (especially if you’re planning to sell the house).
6. Get a home inspection
If and when your offer is accepted, the due diligence period begins. This window is your chance to review all the details of the sale before it’s finalized and protect yourself from additional risk.
Getting the property inspected is one of the most effective ways to protect you from most legal and physical issues.
Foreclosed homes are often vacant for weeks or months, which can lead to issues such as leaks or pest infestations.
A professional home inspection typically takes 2-3 hours, with a report delivered within a few days. With the report in hand, you'll have a clearer picture of the home's condition, which will help you decide your path forward.
7. Conduct a title search
Foreclosed homes often involve missed payments, so you’ll want to know about unpaid taxes, contractor bills, or other claims attached to the property.
A title search identifies any liens or legal issues before you close, helping you understand exactly what you're taking ownership of and avoiding surprise debts after purchase.
8. Get the foreclosed home appraised (if you're financing it)
Whenever a mortgage lender loans someone money to buy a property, the lender wants assurances that their money is being invested wisely. That's why lenders usually require a formal appraisal to determine the property's fair market value.
Foreclosed properties present a special risk since they’re often priced and sold by agents unfamiliar with the area.
If your appraisal comes in low, you’ll have a few options:
- Try to renegotiate the price to be closer to the appraisal value
- Make up the difference out of pocket
- Challenge the appraisal if you believe errors occurred during the process
- Cancel the sale
9. Close on the purchase
If you’re paying cash at an auction, closing should be fast and easy. If you’re not, here are some of the differences between closing on a foreclosure in North Carolina and a conventional closing:
- Closing can take a while: The bank typically won’t send a representative to the closing. Instead, you’ll have to mail the closing documents to the bank and wait for them to return them.
- Seller may not cover many closing costs: The bank has little incentive to share closing costs since they’ve likely lost money due to the foreclosure. That will leave you, the buyer, paying most or all of them.
- Closing may not be final: In North Carolina, the previous homeowner may have a right of redemption period where they can redeem the property after the sale if they pay back the loan within a certain timeframe. This means that even after you close, the house could return to the previous owner if conditions are met.
Closing on a foreclosed home in North Carolina can be confusing, so it’s wise to work with an experienced real estate agent who can help you navigate the process.
- Traditionally, the seller set the fee they were willing to pay a buyer's agent.
- In August 2024, a lawsuit against the National Association of Realtors changed this so that buyer's agents have to negotiate rates directly with the buyers they represent.
- Most buyers will still ask sellers to pay this fee as a concession from their sale proceeds, so the buyer doesn't have to bring more cash to closing.
When you use Clever to find an agent, not only will you get a highly experienced professional, but you could also qualify for cash back. Eligible buyers will receive cash back after closing, which is a great way to get started on renovating your foreclosure purchase.
The first step is to find a great local realtor who specializes in foreclosure purchases. Our free service connects buyers like you with top-rated agents from trusted brands like Coldwell Banker and Century 21.
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What is a foreclosed home?
Foreclosure happens when a borrower misses their mortgage payments or fails to pay their taxes or other debts owed for the home. The lender, government, or other organization can seize and take ownership of the property to recoup their losses.
Once an organization forecloses on a home, it usually sells the property to recover its investment. Usually, this comes in the form of a foreclosure auction or real estate-owned (REO) sale.
Pros and cons of buying a foreclosed home in North Carolina
For most buyers, the biggest draw to foreclosed homes is usually the discounted sale price. But there are other advantages.
That said, you should be aware of the risks associated with purchasing these properties. Title issues and physical damage are just a couple of the problems you might come across when you buy foreclosures in North Carolina.
Pros
The major benefit of buying foreclosed homes is the opportunity to acquire them for below-market value. Currently, the median home value in North Carolina is $329,817. Foreclosed homes can sell 15% below market value, but this varies widely based on local market conditions, the stage of foreclosure, etc.[10]
Over the past 12 months, the average housing inventory in North Carolina has been 40,101 units, which is 30% up from last year.[11] When you add foreclosures to your search, you increase your chances of finding the property you’re looking for.
Since many foreclosures have issues or have been neglected in some way, there's often an opportunity to build in equity by renovating or repairing the home.
For example, in North Carolina, you might buy a foreclosure for $280,344 and spend $24,700 renovating it. The property could be worth $354,517 after all the work is done. That's $74,173 of equity you just created!
Cons
Many foreclosures have been vacant or neglected for an extended period, so they may have substantial damage that needs repair. There are also occasions when distressed sellers intentionally damage property on the way out because they're angry about being forcefully removed from their home.
Some homebuyers feel like they're taking advantage of someone's misfortune when they buy a foreclosed home. In this case, peace of mind outweighs the potential profit you could achieve by purchasing one of these homes.
For a property to be foreclosed, a homeowner must fail to repay a debt for which the property is acting as collateral. However, there can be more than one kind of debt.
For example, a homeowner could fail to pay their taxes as well as their mortgage payments to their lender. In this case, both the government and the lender have a claim to the property — also known as a lien.
When buying foreclosures, always conduct a title check to determine who holds a lien on the property and to ensure the title is clear.
If you buy a foreclosed home at auction, there’s a 10-day period where someone can place a higher bid and receive the property instead. You’ll need to be prepared to put more money down if you want to keep the property.
In North Carolina, you may inherit tenants after a foreclosure sale, which can be a lengthy and complex process. According to the Protecting Tenants at Foreclosure Act, previous renters of the property have up to 90 days to leave the property.[12]
Previous owners are given a 10-day notice to leave the foreclosed home after the sale. If they don’t, the sheriff will post an eviction date, and the occupiers and their belongings will either leave by that date or be removed.[13]
Stages of a foreclosure in North Carolina
A foreclosure typically occurs in three stages: pre-foreclosure (includes short sales), auction, and REO property. If you're not a professional investor, we recommend buying pre-foreclosures and REOs since auctions can be risky and cash-intensive.
Pre-foreclosure (Difficulty: Easiest | Risk: Moderate)
Pre-foreclosure is the period before the bank or government takes ownership of the home. The process typically starts when the homeowner falls behind on payments, usually by 3–6 months. The lender then issues a notice of default, which is the first step in the foreclosure process. After receiving the notice of default, the homeowner may decide to attempt a pre-foreclosure sale to avoid foreclosure and pay back their mortgage.
Buying a house in pre-foreclosure can yield a great deal since the seller likely just wants to sell quickly to avoid foreclosure, but you’ll be on the clock to close the deal.
Short sale (Difficulty: Moderate | Risk: Moderate)
A short sale in real estate occurs when a property is sold for less than the amount owed on the mortgage, with the lender's approval. This typically happens when a homeowner is experiencing financial distress and is unable to keep up with their mortgage payments. It’s similar to a pre-foreclosure sale except the lender is involved. In North Carolina, this year about 2,795 of all sales (2.20%) involved distressed properties.
The sale is contingent on the lender accepting the offer, which can be unpredictable and cause delays. You may also face competition from other buyers and have to negotiate with both the seller and the lender. Short-sale homes are typically sold as is.
Foreclosure auction (Difficulty: Hard | Risk: High)
A foreclosed property can go to auction after the notice of trustee sale is delivered to the borrower. At a foreclosure auction, the property is sold to the highest bidder, who usually pays in cash.
Financing is typically not an option for foreclosure options, and you buy the property sight unseen. Unless you’re an experienced real estate investor, we recommend avoiding auction foreclosure sales and buying pre-foreclosures or REOs instead.
REO / Bank-owned (Difficulty: Moderate | Risk: Moderate)
If a foreclosed home doesn’t sell at auction, it becomes a real-estate-owned (REO) or bank-owned property. Banks are motivated to sell these properties to recover their losses, which can sometimes lead to favorable deals for buyers. In North Carolina, this year about 2,437 of all sales (2.00%) involved REO properties.
However, the process often involves more paperwork and longer waiting periods than pre-foreclosure purchases. Banks typically sell REO properties as is, meaning buyers are responsible for any necessary repairs. It's crucial to work with a real estate agent experienced in REO transactions and to conduct thorough inspections before making a purchase.
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North Carolina foreclosure laws for buyers
Each state has its own set of rules for the foreclosure process. As a buyer, it's important to understand these regulations to:
- Navigate the purchase process effectively
- Protect your rights and interests
- Identify potential opportunities or risks
- Comply with legal requirements
- Understand timelines and deadlines
Knowing North Carolina-specific laws can help you anticipate challenges, such as redemption periods where former owners can reclaim the property. It can also inform your bidding strategy at auctions and guide your approach to negotiations in pre-foreclosure or REO situations.
Consult with a local real estate attorney or a realtor experienced in foreclosures to ensure you're fully informed and protected throughout the process.
In North Carolina, both judicial and non-judicial foreclosures are allowed. Judicial foreclosures require court supervision and a lawsuit filed by the lender. They usually take longer (several months to years) and offer more protections for homeowners. Non-judicial foreclosures, based on a "power of sale" clause in the mortgage, proceed without court involvement. They generally happen within a few months and provide fewer protections for homeowners.[14]
Deficiency judgments are sometimes available to lenders in North Carolina, which means they can accept lower payment on a foreclosed property than is owed on it — also called a short sale. However, banks can take weeks or even months to respond to a short sale offer, so don't expect this process to happen quickly or easily if you're interested in buying one.[14]
North Carolina homeowners can stop the foreclosure process by paying off the entirety of their loan (or other debt owed) before the sale occurs.
Depending on the foreclosure sale, the right of redemption period varies in North Carolina. Talk with your real estate agent before you buy a foreclosure to understand how that might affect your foreclosure purchase.[14]
The Servicemembers Civil Relief Act (SCRA) offers foreclosure protections to military service members, including a generous right of redemption that can reverse a foreclosure months or years after the fact.
FAQ about buying a foreclosed home in North Carolina
There are three main stages to foreclosure in North Carolina: pre-foreclosure (includes short sale), foreclosure auctions, and real estate owned (REO) foreclosures.
Buying pre-foreclosures or REOs is similar to buying conventional homes — you find a property, make a written offer, negotiate terms and price, and then close.
Buying foreclosures at auctions requires registering with the trustee, attending the auction, bidding on a property, and paying for it in cash or certified funds.
If you want to learn how to buy foreclosed homes, we recommend talking with a real estate agent with foreclosure experience. They can help you decide which type of foreclosure sale is right for you.
To find pre-foreclosures, search for the keyword "pre-foreclosure" on real estate websites like Zillow, Realtor.com, or Redfin. To find foreclosure auctions, search online directories like Auction.com or public newspapers. And for bank-owned properties, survey lists of REOs on major bank websites. Check out our list of the best foreclosure websites to find more resources.
If you're buying a pre-foreclosure in North Carolina with conventional financing, you'll need an inspection and appraisal, so closing will take at least 30 to 45 days.
Foreclosure auctions have a 10-day period when you can be outbid. After that, you can pay in full and receive the title in days.
If you’re buying a bank-owned or REO foreclosure, closing can take a few months due to a lot of paperwork, compliance checks, and lien removals.
For many buyers, feeling like they're profiting from someone's misfortune makes buying a foreclosed home not worth it, particularly since the homes may need additional work. Also, the buying process can be long and complicated, so if you’re looking to buy a home fast, it’s probably not the best option for you.
However, foreclosure sales can result in below market sale prices and opportunities for sweat equity, so they can be worth it to patient buyers or investors who wait for the right property to come along.
Why trust us?
Data sources
We gathered North Carolina home values and home value projections from Zillow, as well as housing inventory numbers from Realtor.com. For data specific to foreclosures and REOs, we gathered state information from vetted sources such as House Canary, Nolo, SoFi Learn, and more to provide our readers with up-to-date content. As our primary sources update, we refresh the data in our series accordingly.
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