Friday, September 15, 2017

Buying a Foreclosed Home: What You Need to Know

By Margaret Heidenry

Buying a foreclosed home at auction or from a lender can be a way to purchase a property at a discount, and who doesn’t like a discount? But purchasing a foreclosure property can be a complicated transaction. Here’s what you need to
know about the process of buying a distressed home.

What, exactly, is a foreclosure property?

A foreclosed home is when a lender or lien holder seeks to take a property from a homeowner to satisfy a debt. The lender can either take ownership of the property or, most likely, sell the property to pay off the debt. The lender typically isn’t always looking for top dollar on this loan-gone-bad, just a fair price that will at least cover the unpaid mortgage.

What is pre-foreclosure?

A pre-foreclosure property is not necessarily for sale. The pre-foreclosure stage is the period after a default notice has been sent to the homeowner and before the property is sold at a foreclosure auction. The owner may be working to fix the loan default or be hoping a cash buyer will purchase the property before foreclosure, which would damage his or her credit. Most experts consider this the most difficult stage during which to purchase a distressed home; you’ll be dealing directly with the owner, not a bank or mortgage company.

Although the pre-foreclosure stage can yield some great deals, transactions are often tricky because most of these houses are not yet on the market and, if the owner pays off the debt, may never be for sale.

How does a foreclosure auction work?
If you’re an auction newbie, attend a few with the intention of learning not buying. Some are small trustee auctions that don’t take long; others are held by large auction firms and include multiple properties. Seeing how the auction works will prepare you to jump in once you’ve found a property you like. Once that happens, use Zillow’s Foreclosure Estimate to determine what the home will likely sell for.

When you’ve found a property you want to bid on, contact the auctioneer or trustee to determine how much money you need to bring to the auction; the amount varies from state to state. Many auctions require bidders to bring a certified check for $5,000 made out to the auction company to show legitimate intent. In some cases, a percentage of the winning bid is required on the day of the sale. Make sure you research auction requirements in your state before bidding on a foreclosure.

How to find foreclosure properties

To see pre-foreclosure and foreclosed properties on Zillow, enter your search area, click “Filter,” and then click the “Pre-Market” category. Or you can check Zillow’s Agent Finder to find agents who have experience with foreclosures; open the “Advanced” menu under Service Needed and click Foreclosures in the list of Specialties. Your agent will guide you to foreclosure property listings on the Multiple Listing Service (MLS), a real estate professionals-only database.

Other sources of distressed property information include newspaper legal notices, bank websites, and government websites such as the Federal Housing Administration. Beware of ad-based, subscription websites because which may include inaccurate or outdated listings.

A few words of caution

Distressed properties are generally sold “as-is,” as in what you see is what you get. There are no warranties so make sure a certified inspector looks over the property before you make an offer. You need to know how much it will cost to make the place habitable or flippable.

Lenders typically clear the title before listing a foreclosure, but it’s wise to hire a title company to research and cure title problems before closing on the property.

It’s also a good idea to have your financing lined up before making a bid. But even if you offer cash, don’t expect a deal on a bank-owned property to proceed quickly. Multiple pairs of eyes must review the deal and respond to your offer. It could take weeks, so be patient.

My name is Scott Grebner and I have been helping my clients realize their own personal real estate dreams. Real estate is a relationship-based business that works best when client relationships are built on trust and confidence. My goal is having clients be completely satisfied with the professional and caring service they have received.

The role of technology is rapidly changing how the real-estate market functions in this country today. Re/Max Preferred Choice is embracing these new mediums of communication to better serve our customers. We have created our company to better place important information in your hands to help you with your housing needs. For a personal consultation please contact me at my Website.

It seems that the dream of past generations was to pay off a mortgage. The dream of today’s young families is to get one. I would love to hear from you, about your Real Estate Dreams and questions.

No comments:

Post a Comment