Buying a foreclosed home can be a great way to get the home you want for the money you want to spend. Our agents are experienced in dealing with banks and foreclosures. Contact one of our agents about purchasing a foreclosed home. They are available 7 days a week to take you out to view homes.
When a homeowner fails to make payments on their mortgage and has not chosen to utilize another option, such as a short sale, the lender will take possession of the property. This consequence is a very specific legal process called foreclosure. Unlike a short sale, when this happens, the property holder's name is no longer on the title or part of the sale. There is also no real estate agent involved in the process. The property will then be auctioned at the county's court house – typically sold at much lower than the market value. This must be paid in full at the time of the auction.
There is also something called a pre-foreclosure that those looking to buy homes may see listed occasionally. This term is used when a homeowner is likely in danger of foreclosure, prior to a notice of default (NOD). This is basically a marketing tool used to attract buyers to a “distressed sale.” Real estate agents are hoping it will create interest as a property below market value. Buyers should do proper research to find out if this is, in fact, the case.
There are two primary types of foreclosure in the United States and most other countries – foreclosure by judicial sale and by power of sale. The first type, also called judicial foreclosure, is under the supervision of a court. It deems that the profits from the sale should first complete the mortgage payment, go to any other lien holders secondly and lastly to the borrower (previously the homeowner) if any funds remain. The second type, foreclosure by power of sale, does not require the court's supervision. The sale of the property is done by the mortgage holder and is typically quicker than the previous. Although, it has the same policy when divvying the earnings post-sale.
A debtor is also able to contest a foreclosure in the United States by asking the court for an injunction. They would first seek a temporary restraining order, but in order to protect the creditor from frauds, they may have to post a bond for the amount of the debt they owe. The validity of the debt may also be challenged by the debtor to stop the foreclosure – some even sue for damages. The lender must then prove there are truly owed funds.
While the price may be appealing, one should be cautious when buying a foreclosed property unless they are an experienced investor. Regular buyers should enlist the help of a real estate agent when purchasing a foreclosed home. Some problems can occur in or after the process including: title problems, IRS liens, tenants or owners still occupying the property, structural problems, and/or superior loan pay-offs. These issues would normally be investigated by title professionals and realtors in typical sales transactions. Foreclosure auctions can be a very risky way to purchase property for those who don't truly know the real estate investment market.
Remember: Our agents are experienced in dealing with banks and foreclosures. They can help you navigate the process and find just the right home for your budget and timeline. Meet our Agents