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Foreclosures for Sale
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Foreclosures
Is Buying Foreclosures a Good Deal?
Home buyers who want a good deal in real estate invariably think first about pursuing foreclosures. Buyers have this picture in their mind of a house in great condition ready to move into and buying it for half its values, but that scenario is generally far from that. The large percentage of the foreclosures are from people who are in homes that are worth less than what there mortgage is and can not afford to pay the increase in payment on the interest only or adjustable rate mortgage they signed up for. Or is a part of some form of real estate fraud scam. Some of the homes are so damage that they can not be financed or they are in need of expensive repairs. There are small percentages that are great deals but you have to go through a lot of bad apples to find a good one.
Why Do Sellers Go Into Foreclosure?
Sellers stop making payments for a host of reasons. Few choose to go into foreclosure voluntarily. It's often an unpredictable result from one of the following:
- Laid-off, fired or quit job
- Inability to continue working due to medical conditions
- Excessive debt and mounting bill obligations
- Squabbles with co-owner, divorce
- Job transfer to another state
- Foreclosure proceedings vary from state to state. In states where mortgages are used, home owners can end up staying in the property for almost a year; whereas in states where trust deeds are used, trustee sales give a seller about four months before she needs to vacate.
- Almost every state provides for some period of redemption. This means the seller has an irrevocable right during a certain length of time to cure the default, including paying all foreclosure costs, back interest and missed principal payments, to regain control of the property. For more information, consult a real estate lawyer.
- Many states also require that buyers give to sellers certain disclosures regarding equity purchases. Failure to provide those notices and to prepare offers on the required paperwork can result in fines, lawsuits or even revocation of sale.
- Determine whether you're the type of person who can easily take advantage of a seller's misfortune under these circumstances and / or put a family out on the street. Oh, critics will argue it's just business and sellers deserve what they get, even if it's five cents on the dollar. Others will feign compassion and trick themselves into believing they are "helping" the home owners avoid further embarrassment, but deep inside yourself, you know that's not true.
Buying a Home at the Trustee's Sale
Check with your local county office to find out how sales in your area are handled, but common threads among most of them are:
- No loan contingency
- Sealed bids
- Proof of financial qualifications
- Sizeable earnest money deposits
- Purchase property "as is"
Sometimes buyers are not allowed to inspect the house before making an offer. The problem with buying a house sight unseen is you can't calculate how much it will cost to improve the structure or bring it up to habitable standards. Nor do you know if the occupant will retaliate and destroy the interior. On top of that, you may need to evict the tenant or owner from the premises after you receive title, and eviction processes can be costly.
5 Foreclosure Laws You Need to Know
- Notification of intent to foreclose. Many states require that the lenders notify the borrower in advance (30 days, for example) before obtaining a court judgment to foreclose.
- Non-judicial foreclosure. Many states permit lenders to add a clause to a mortgage document that permits the lender to foreclose and sell the property without obtaining court approval.
- Deficiency judgment. Some states permit a lender that forecloses on a mortgage to file a judgment against the borrower entitling the lender to collect from the defaulted borrower any amount of the outstanding mortgage not covered by the sale price.
- Right of redemption. Some states (New Jersey, for example) permit a default borrower to satisfy the loan default and recover the property if done within a specified amount of time after the property is sold.
