The District of Columbia has 1 foreclosure for every 5,152 housing units, putting it roughly 20th nationally. Considering that DC only has a little more than 350,000 housing units total, not many foreclosures are coming onto the market.
Still, when a DC foreclosure does hit the market, it’s a golden opportunity for a buyer or investor to get a property in a hot market at a big discount.
Buying a foreclosure can be a little more intimidating than buying a conventional home. That’s why your best bet is to partner with an experienced District of Columbia real estate agent — preferably one who specializes in foreclosures. A seasoned agent will help you stay on top of the District’s fast-moving foreclosure market, put in competitive bids, and get the keys to your dream foreclosure!
If you need help finding an agent that focuses on foreclosures, Clever Real Estate is an agent-matching service that can connect you with the top foreclosure experts in your area — no strings attached.
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What is a foreclosed home?
A foreclosed home is a property that’s been seized (foreclosed on) by the lender, government, or other agency because the borrower-owner fell behind on their mortgage payment, taxes, or other fees.
To recoup their losses, the foreclosing party then sells the property either at a foreclosure auction or on the open market.
How to buy foreclosed homes in Washington, DC
1. Get preapproved for financing
Mortgage preapproval requires you to submit your financial info to your lender. It will then tell you how much of a loan you can take out. Getting a pre-approval letter from your lender will show sellers that you’re a serious, qualified buyer.
If you’re curious how much you can get preapproved for, our friends at Rocket Mortgage can send you an estimate right away. Answer a few simple questions to see what you can afford!
Buyers targeting foreclosures in Washington, DC could access low-interest government-backed mortgage programs from the FHA, VA, or the USDA.
Qualified DC residents can also access special financing like the District’s Home Purchase Assistance Program, which offers home buyers up to $202,000 in financing assistance.
2. Hire a top Washington, DC realtor with foreclosure expertise
Buyers targeting foreclosures in DC should partner with a DC agent who has ample experience in the foreclosure market. The right agent can:
- Let you know about foreclosures before they hit the market
- Advise you on making optimal offers
- Help you navigate foreclosure auctions
- Guide you through what can be a long, confusing closing process
Need help finding a Washington, DC agent with foreclosure expertise? Clever is here to help. We have a large network of agents that work for brokerages like Century 21, Keller Williams, and more. They offer the expertise you need to beat the competition and come out ahead with your offers.
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3. Find foreclosed homes in Washington, DC
To find foreclosed homes for sale in DC, we highly recommend starting your search with a tool that searches for you, like Foreclosure.com. Simply search by state and county to see a list of foreclosed homes near you.
The District’s Office of Tax Revenue also maintains a list of properties to be auctioned off for back property taxes.
Big real estate websites might be another place to look. For example, Zillow and Realtor.com both let you search for pre-foreclosures and foreclosures within a certain radius.
Private banks often maintain directories of their bank-owned foreclosure properties:
Finally, some government-maintained databases of foreclosed properties include:
- The U.S. Department of Housing and Urban Development (HUD) foreclosed homes database
- Fannie Mae’s HomePath
- Freddie Mac’s HomeSteps
- The Department of Treasury’s list of IRS-repossessed foreclosures
- USDA Rural Development and Farm Service foreclosures
4. Tour foreclosures in person
You should always try and tour a foreclosure in person before you put in an offer. But this isn't always possible.
If the foreclosed property is still occupied, the people living there may not be eager to help the sale process along. Even if it's an empty foreclosure, these properties are sold "as is" and are not usually accessible to auction bidders or buyers. However, if a bank-owned property (REO) is being sold on the open market, the listing agent will usually let you tour the property.
If you do manage to tour a foreclosure, look for things like signs of neglect or trespassers, serious damage like burst pipes or a leaky roof, and the quality of the neighborhood.
5. Submit offers
To make your offer on your Washington, DC foreclosure as strong as possible, consider the following:
- Enclose your mortgage pre-approval: Pre-approval shows you're a qualified buyer.
- Submit a close-to-market-value offer: While many foreclosure buyers are tempted to submit lowball offers, most lenders today aren't desperate to offload their foreclosed properties.
- Make a sizable down payment: Putting more money upfront shows you're a serious, safe buyer.
- Prepare for a long wait: If you're making an offer on a bank-owned property, your offer must move up the chain of command before it can be approved.
6. Conduct due diligence on the property
Once the seller accepts your offer, it's time for you to conduct your due diligence.
In a conventional sale, this is when you'd typically receive required disclosures from the sellers. But since the owner of a foreclosure hasn't occupied the property, they won't be able to provide these to you.
To protect yourself, take these four actions:
- Buy title insurance to protect you if any undiscovered claims on the property emerge after the sale.
- Order a title review to look into whether there are any legitimate liens or claims on the title. If any are discovered, they'll have to be remedied before the sale can be finalized. The title review is usually done by a title company or a real estate attorney.
- Order a survey to confirm the property’s boundaries.
- Get an inspection. With some foreclosures, this may not be possible. Government foreclosures have unique rules governing pre-sale inspections, and while you can usually have a bank-owned property inspected, the owners probably won’t accept an inspection contingency.
7. Get the home appraised if you're financing it
Your lender will require an appraisal of your foreclosed property purchase to confirm it's actually worth what it's loaning you. If the appraisal amount is less than your mortgage amount, the sale could fall through.
If your appraisal ends up being low, your options include:
- Getting the price reduced
- Getting a second appraisal
- Making up the difference in cash
- Walking away
8. Close on the purchase
Closing on a foreclosed property in Washington, DC can be unconventional for a number of reasons.
- The seller won't cover any closing costs: In a conventional sale, the seller usually meets you halfway and pays a portion of the closing costs. But when buying a foreclosed property, the seller rarely compromises. (An experienced agent may be able to negotiate a better deal.)
- Closing can take far longer than a day: With a foreclosure purchase, you'll likely have to send the closing paperwork to the seller (usually a bank) and wait for them to review, sign, and return it.
Closing on a Washington, DC foreclosure can be complex, and there's a lot at stake. Consider hiring a reputable agent to help guide you through the process.
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. This free money could be a great way to get started on renovating your foreclosure purchase.
See if you qualify for cash back now!
Pros and cons of buying a foreclosed home in Washington, DC
✅ Low price
The main reason to pursue a Washington, DC foreclosed home is that you can often buy a property for significantly less than market value. This is an especially valuable opportunity in a pricey market like the District.
✅ Clear ownership
If you're purchasing a bank-owned property, the bank has already cleared the title, so you don't have to worry about unknown liens or claims emerging in the future.
🚫 Foreclosures are sold "as is"
When you buy a home in DC in a conventional sale, you can negotiate with the seller to make repairs before closing. But foreclosures are almost always sold "as is," so any repairs are your responsibility.
🚫 Inspections can be hard to arrange
Since many foreclosures are still occupied or boarded up when they're listed, you may not be able to physically access the property before you submit an offer.
🚫 Some foreclosures are distressed
Disgruntled occupants can vandalize the property shortly before they're evicted via foreclosure, and abandoned foreclosures are sometimes illegally occupied by vagrants.
Stages of a foreclosure in Washington, DC
Once the owner-borrower misses their first mortgage payment, pre-foreclosure begins. Here's a quick look at the pre-foreclosure timeline:
- The bank mails notice of default to the borrower no more than 36 days after their first missed payment.
- In the District of Columbia, borrowers can opt for foreclosure mediation within 30 days of receiving the notice of default.
- If mediation fails, the bank sends a notice of intention to foreclose to the borrower. This notice includes the time of the foreclosure auction. Foreclosure can't happen until a loan has been delinquent for 120 days.
- In the District of Columbia, borrowers can “reinstate” the loan by paying all back payments and fees up to five days before the auction.
If the owner-borrower doesn't bring their mortgage current by the end of pre-foreclosure, the property is auctioned off to the highest bidder at a foreclosure auction.
While this does theoretically offer an opportunity to snag a bargain foreclosure, these auctions are usually attended by investors who pay all cash, so it can be tough for a conventional buyer to get a deal. In addition, many auction houses require a significant deposit to participate in bidding, which can limit access.
Bank-owned or real estate owned (REO)
A foreclosed property that fails to sell at auction becomes a bank-owned or real-estate-owned (REO) property.
Many banks contract with real estate agents to sell these REO properties on the open market, though sometimes buyers have to negotiate directly with the bank. Either way, buying a foreclosed property directly from the bank can be a lot more challenging — and frustrating — than buying from an individual seller. The best course of action here is to work with a Washington, DC real estate agent who has experience with bank-owned foreclosure properties.
Washington, DC foreclosure laws for buyers
You'll find the main laws on DC disclosures in DC § 42-815. It covers the rules and timelines for the:
- 30-day Notice of Intent to Foreclose requirement
- Public Notice of foreclosure
- Notice of Default
- Owner Right of Reinstatement (up until five days before the auction)
Lawmakers recently added a new section to DC foreclosure law — § DC 42–815.02. This DC law gives homeowners the right to a mediation process that can halt or delay a non-judicial foreclosure. If you agree to meditation, you have to complete the process with 180 days unless both parties agree to a 30-day extension.
The Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act is a federal law that extends significant foreclosure protections to members of the military. It includes a right of redemption that can reverse a foreclosure after the fact if it took place during the former owner’s active duty.
FAQs about buying a foreclosed house in Washington, DC
Buying a foreclosed home in Washington, DC is a lot like buying a conventional home — with a few crucial differences. You might have to purchase the property through a foreclosure auction, negotiate a fast deal on a pre-foreclosure, or purchase directly from a bank. Learn more about the pros and cons of buying a bank-owned foreclosure.
Foreclosures are listed in auction sites, real estate websites like Zillow and Redfin, government directories from Fannie Mae and HUD, and private bank websites. Check out our list of the best foreclosure websites to find more resources.
Yes, foreclosures are absolutely worth buying in Washington, DC. Foreclosures can often be purchased for significantly less than market value — a rare opportunity in a hot market like Washington, DC. Learn more about how to decide if buying a foreclosed home is right for you.
Buying a foreclosed home in Washington, DC can take days, weeks, or months, depending on what stage of the foreclosure process the property is in (pre-foreclosure, auction, or bank-owned), how you're paying for it (cash or financing), and who is selling it (bank or individual). See more about how long it might take you to close on your home.
Why trust us?
Clever Real Estate has spent hundreds of hours researching foreclosure law and interviewing licensed agents with experience buying foreclosures to create this guide. We utilized authoritative sources including the Code of the District of Columbia and the DC Office of Tax and Revenue.
The author, Lindsay Stefan, has over eight years of experience writing, editing, and copywriting for various websites, publications, and advertisements.